China problem wasn't just a bubble?

Discussion in 'General Trading Discussion' started by WaveWage, Sep 20, 2015.

  1. WaveWage

    WaveWage Well-Known Member

    Sep 2015
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    Some investors says that what happened to China's market is nothing outside of a bubble that exploded. Basically, the exportation and so on phenomena would be not much worrying since, in the overall, China's stock is still doing better than at the beginning of the bubble.
    To let you show, in June, 2014, the Shangai Composite Index was at 2,070 pts. The highest point was in June, 2015, with 5,178 pts (+150%, if you wonder). And right now, we are at 3,097 pts (+49%, compared to June, 2014). Does it show that the growth of the market was unexpected and not realistic, or we got something more worrying than a bubble exploding into the China's plate? Finally, how the Yuan devaluation plays with that? Does it feel that bad, finally?

    I let you the link of one article about the topic:
  2. baudwalk

    baudwalk Senior Investor

    May 2015
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    Unless you subscribe to Barrons you can't read the story. The story of the Chinese market troubles and bubble was detailed by the Guardian in early July:

    And the rest of story continues here ( And see message 12 for the very latest in the investigation with chsrges against Zhang Yujun and my opining on the December Fed rate hike speculation. HTH. YMMV.
    Last edited by a moderator: Jul 8, 2016
  3. Nox

    Nox Guest

    Aug 2015
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    I don't subscribe to Barron's so I too can't access the article referred to. It's quite interest to read the number of articles and newfound critics on this topic after the fact.

    I'm not too sure whether I believe this was indeed a bubble. I'm more subscribed to what happened in China being an overreaction by the markets to negative news and/or uncertainty. The devaluation gave extra an extra push to the negative sentiments already forming in the market. In the long run market value is equal to intrinsic value. I do believe believe that the Chinese market may have been slightly overvalued (with the promise of yield and steady growth rates, it was inevitable that money would eventually make its way there), but not so much that I view it to be a bubble. Right now even after the so called "crash" we're actually seeing some companies and some industries that are already showing signs of moving towards normalisation.

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