Chinese Stock Market is More Crazy

Just 4 months after I posted my last comments (Chinese Stock Market is Crazy), the Shanghai Stock Index raised from 3000 points to 4000 points, and keep increasing.

That means, the stock index increased from 998.23 in June 2005 to 4040 in May 2007 – 4 times increase!

What a crazy market.

Shanghai is an economic center for China, and everyone is involved. I am back from a wedding dinner tonight, and on the table, the major topic was “stock”!

I have no idea about stock – I was not in stock in the last round of bull or bear market in 2001 – 2004, and not in this round of stock change. I didn’t pay too much attention about it. Today, when Wendy told me that the stock index has been above 4000 for some time, I was really surprised. What is the next?

There are people claiming that the stock will be 6000 shortly… Who knows?

11 Comments

  1. whatever goes ‘up’ eventually comes down. the stock bubble will ultimately burst and when it does many people will lose a lot of money, including all their savings. that is the downside of a massive bubble.

  2. Couple things:

    1) The Chinese stock index (Shanghai Composite) is not a very accurate indicator of what’s

    going on in the market. The index is heavily weighted on ICBC, BOC and other bank stocks. Those bank stocks have big market cap or the float is not necessarily big (e.g., ICBC, BOC). In other words, people can buy or sell those stocks to manipulate the index.

    2) the Bubble: the bubble is there. You know it, I know it, the grandma sits at the stock exchange knows it. But bubble will usually last longer than people thought. Some examples: the stock bubble in 1990s in the US, the housing bubble from 2000 to 2005 in the US…

  3. Very true. Do you remember this book, published a few months before the stock market bust?

    http://www.amazon.com/Dow-36-000-Strategy-Profiting/dp/0609806998/ref=pd_bbs_1/102-2891326-1909739?ie=UTF8&s=books&qid=1179689516&sr=8-1

    There is a lot of liquidity in China. I believe the Shanghai stock market will keep rising for a while longer.

  4. “whatever goes ‘up’ eventually comes down.”

    While the China bubble will burst and hurt lots of people’s savings (and I think they need a correction around here, things are too volitile) – whatever goes up eventually comes down does not apply to stock markets. taking the long view – all major stock markets in the world – dow jones, nasdaq, hang seng, london times, nikkei – have only gone up and up. sure there’s corrections and temporary downturns, but everything has only gone up as an upward trend.

    that might not help the personal investor though – that doesn’t have the cash reserves to withstand the downticks, but everything that goes up does not come down.

  5. just to make it more accurate, nasdaq is currently setting at 2500 and has yet to be recovered from the pre-bubble more than 5000 sth.

    Bubble definitely will hurt the majority of household shareholders in a great deal. chinese market has been attracting too many first-time and very inexperienced investors. whenever grandmas fork out their little peggy saving, the bubble is to burst anytime.

  6. Is it possible to short stocks on in China? I’d be interested in dumping my savings in the mkt that way….

  7. There is a lot of liquidity in China. I believe the Shanghai stock market will keep rising for a while longer.

  8. overall the stock market is more akin to a giant and long roller coaster ride. It’s easy going ‘up’ but it can be a wild and scary ride going down and then hitting a sharp curve and almost being thrown from one’s seat.

    I am also invested in stocks and enjoying the long ride ‘up’. a little voice tells me when to end the ride.

  9. lots of people get together,and large fund will flow in stock.

    so organization can not control stock index,it will get persistent increasing age.

  10. It is apparent the government has sunk her national reserve into the stock market and kept her economic miracle intact, should it reach the bursting point and the she is unable to sustain the market value, the blood of China will freeze.

  11. Well, remember what Bernard Baurch said about barbers and newspaper boys giving stock tips …

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