Black Day for Shanghai Stock Market

May 9 is not a good day for Shanghai Stock Market. It reached the lowest point of the six years. It closed at 1,130.835 yesterday.

I never invested in stock market in Shanghai, and I have no idea about the stock market. But I know, the stock market in China encountered big problem.

screen-shanghai.stock.index

Image in courtesy of Yahoo! Finance

From a normal non-financial major person, the fact I know/heard of (but didn’t confirm) is:

  • Most of my friends were losing money in the last three years (from 2002 to 2004), and I didn’t see anyone discuss about domestic stock market.
  • People say the prosperity of real estate market in Shanghai may be due to the lack of confidence to stock market
  • I personally don’t trust listed companies.
  • My friends told me many CEO or big boss of listed company don’t know the stock price of their company at all – they just don’t care.
  • Yesterday, I watched a program by Lang Xian Ping, a famous encomiast in China. He called for more stick monitoring of the bad guys in the stock market.
  • I heard from radio that recently, there is only one result for any news release, no matter it is good news or bad news from listed companies or the market. The result is: big drop in the stock price or the stock index.

Disclaimer: as I said, I have no idea about stock. The above information were either heard (from TV, radio, my friends) or my personal observation. I have no ability to check whether the facts are correct or not, or the opinion are correct or not. So take it with great caution.

36 thoughts on “Black Day for Shanghai Stock Market

  1. Mark

    Shanghai Stock Index Slumps to Six-Year Low on Share-Sale Plan

    By Zhang Shidong

    May 9 (Bloomberg) — Shanghai’s key stock index slid to a six-year low after the securities regulator picked four companies for a trial sale of state-owned shares in preparation for the disposal of government holdings valued as high as $264 billion.

    “Investors are concerned the plan will release more shares into the market and cause prices to fall in the short term,” said Zhu Ping, who helps manage $483 million as investment director at GF Securities Co. in Guangzhou.

    Baoshan Iron & Steel Co. led declines after 1.65 billion of additional shares sold by the company began trading, reducing the government’s holdings and fueling concern that the value of its existing stock will drop.

    The Shanghai Composite Index, which tracks yuan-denominated

    A shares and foreign-currency B shares, fell 28.31, or 2.4 percent, to 1130.83 at the 3 p.m. local time close, the lowest since May 19, 1999.

    The Shenzhen Composite Index, which tracks the smaller of the two Chinese markets, dropped 9.38, or 3.3 percent, to 274.19, the lowest since Oct. 7, 1996.

    Both indexes had their biggest declines since Oct. 14. Markets were shut last week for the Labor Week holiday.

    Shanghai Zi Jiang Enterprise Group Co., Sany Heavy Industry Co., Tsinghua Tongfang Co. and Hebei Jinniu Energy Resources Co. received approval from the China Securities Regulatory Commission for share sales, according to company statements to the Shanghai and Shenzhen exchanges. Trading in their shares was suspended.

  2. leady

    Chinese Stock Market…………….

    1130…god

    emmm…

    My friends lost their mony in those two market too. you can extend the range to 2000.

    The only thing which I can say is waiting and patience, actually nothing we can do.

    too complex….

  3. PC

    I don’t think now it’s a good time to invest in China as it is near a “cyclical” peak. However, if you put a gun to my head and force me to choose whether to invest in Shanghai properties or the Shanghai stock market, I will choose the Shanghai stock market.

    Sentiment on the Shanghai stock market is dark and very pessimistic. A lot of bad news have already been discounted. People have “given up” on the stock market and daily trading volume is very low. These are the conditions required for a bottom.

    On the other hand, everyone and his dog expect properties will keep going up for years after the current “brief” correction. There is still optimism over properties. This is the opposite of the stock market.

    According to Warren Buffett, the secret to investment success is “To be greedy when others are fearful and to be fearful when others are greedy”.

    Right now, there is a lot greed in China real estate and a lot of fear and pessimism in stocks. Again I don’t think this is the right time to invest but I will pick Shanghai stocks as the “lesser” of the two evil.

  4. fire8

    My vote is to start buying stocks rather than property too, i think that the revaluation of the yen will do more good for the stocks than the property. The timing of the entry is critical though.

  5. kEiThzc

    would u please generate

    a full text rss feed like the one of ur chinese blog’s?

    thx a lot, i’m very appreciate ur blogs

  6. 锦鳞

    I have been investing in the Chinese stock market and will keep doing so.

    No question about the fact that the Chinese stock market was discouraging during the past several years. No doubt that the road ahead will be bumpy. However, as long as China is manufacturing for the world, I am bullish on its stock markets in a long run – i.e. I believe that long-term investors in China will be paid off.

    Even during the bear markets in the past years, we could find evidence that supports this kind of bullish view. Here are two examples: first, the stocks of the oversea-shipping sector in China performed well. second, the commodity markets (base matel etc) have been doing very well.

    You are welcome continue on this object.

  7. Lisa

    It’s surprised to read comments on equity market here .

    Today , the ShangHai Security Exchange Index breaks 1100 and now remains there , again new low in six years .

    Here I’d like to say something , as a newcomer entering into the market during bearish session.

    1) No low is low enough . SSE index may break 1000, or 800 there won’t be an end .

    2) Why so low ? There are always reasons for making a short . The uncertainty of shareholder rights reform deteriorating the looming atmosphere . Some growing sectors reached their peak , as some forecasts say . And the individual investors lose their confidence , which may cost long time to rebuilt again .

    3) What is the way out ? So far I have no answer . But my philosophy is , and supported by dozens of tremendous rebounce stories , opportunities exist in mass for those who have discernness and bravery to obtain .

    Note: the above points represents no constitutional or public view . Rather , I am expressing how I feel in the position of a friend who visited the blog owner once .

    :D

  8. 锦鳞

    The contrarian investing style makes sense to me too. I would like to take the current bear markets as the buying opportunities. However, rather than buying into the general markets I think sector and stock picking are the keys.

    As a new comer (or a comeback guy after 10 years) to the Chinese stock markets, I don’t even want to pretend to be an seasoned person on this issue. Lisa, could you please comment on your “Some growing sectors reached their peak” or direct me to the right places? I’d like to learn more about the fundamentals of different industrial sectors.

    A word to our host (Jian Shuo Wang): sorry for turning your blog into a forum of a boring topic. Hopefully, it can bring you some extra internet traffic :-).

    锦鳞

    Blog: http://chinafianace.blogchina.com/

    Email: jinlinlet@gmail.com

  9. btr

    It’s approaching the long term support above 1000. If you have not invested any in the stock market, maybe it’s time to buy some. Usually when everyone is giving up of owning stocks, it’s the time to buy them:-)

  10. btr

    It’s approaching the long term support above 1000. If you have not invested any in the stock market, maybe it’s time to buy some. Usually when everyone is giving up, it’s the time to buy them:-)

  11. Rich

    With stock markets that can only trend downwards, the average Chinese investor is limited to few investment choices that have any potential. No wonder real estate keeps trending upwards.

    Unfortunate that personal outbound investment has been basically forbidden. Imagine what might happen to all those $$ if individuals could invest what they wished to outside of the country.

    Rich

    Asia Business Intelligence

    http://www.asiabizblog.com

  12. Annie

    Hey, you are so funny! Here’s what I get after reading your blog: I don’t know what I’m talking about :p

  13. foreigndood

    Hello

    I am a chinese american living in the US

    Can I invest in the shanghai stock market or do you have to be a citzen of China to invest in the shanghai stock market?

    If I can, can you point me to a legit broker

    Thanks

    :D

  14. jinlin

    Dear foreigndood,

    You can invest in any stocks in China because of your citizenship. The easiest way is to ask one of your friends in China to open an account with local brokers for you.

    You can also invest in ADR’s in US (which all US brokers will be wiling to do for you), or H-shares of Chinese companies in Hong Kong (SmithBarney can handle this kind of transactions, as far as I know).

    Good luck

  15. DChow

    Hi, Jian Shuo:

    I live in the US but make trips to Shanghai every year. Observing the Shanghai market but not being a player, I have generated a lot of questions about it:

    a) Why does the intraday chart of Shanghai perfectly mirror that of Shenzhen everyday? Don’t the two exchanges have different stock listings?

    b) Do “institutions” (sizeable mutual funds, hedge funds etc) participate in the Shanghai market, much like the US?

    c) Are margin accounts prevalent for retail trading in Shanghai?

    d) The Shanghai index has already gained 50%+ in the short 5 months this year, with more retail accounts opened than the entire last year. What do you see as THE trigger for a correction? And how soon?

    Thanks in advance for educating me on your market. I hope to reciprocate by answering any questions you may have about the US market.

    Regards,

    D Chow

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  22. Stock Training

    This is such a great blog. I have learned so much from it in just an hours reading. I was not aware of the issues in Shanghai at the moment. Keep us posted!!

    Eric

  23. Tom

    Excellent website!! I have been reading your blog quite a bit recently. You are a great writer. Please take a moment to look at my website. I am coming to Shanghai in October and would love to talk about it with you if you are willing Jian.

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  25. BUZZINGSTREET

    Dear Visitor,

    Market is showing some good move. Nifty traders are now confused if they should go short in Nifty from current level of 5400 or should go further long. NSE and BSE are the two major stock exchanges of Indian stock market.

    Keeping in mind that many investors and traders are very much confused with the current market move, we have stared posting Free buzzingstreet.com/MoreResearches.aspx

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    Regards

    Stock market investment if done with proper research and updated knowledge than it can give very lucrative results. There are four basic golden rules of stock market which are to be followed

    (thebuzzingstreet1@gmail.com) http://www.buzzingstreet.com

    Technical research report, Nifty levels, Stock market tips, Share market articles all available on site for free. We deliver high accuracy in our stock tips. Visit us at http://www.Buzzingstreet.com for more details

    We will be discussing the various benefits of speed trading and its various coefficients using which one can make the most out of their investments in the Indian stock market including both Nifty and Sensex (NSE and BSE)

  26. BUZZINGSTREET

    Dear Visitor,

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    Nifty is on its peak now and is turning volatile. Investors are suggested to book long delivery positions soon. As after some more upmove we can see profit booking in the market soon. Investors are suggested to grab quality stocks at lower level again.

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  28. sharetipsinfo

    In this article we shall be discussing about the various ways in which one can make as much profits as maybe possible and how we can select securities to make investments. Investing in securities can be profitable only if investment is done with proper research

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