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  #1 (permalink)  
Old 23rd November 2007, 03:18 AM
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CNNmoney - China bubble poised to burst on next negative development - Morgan Stanley

I'm out of equities completely, into gold/silver, are you??


http://money.cnn.com/news/newsfeeds/...3-21135230.htm

China bubble poised to burst on next negative development - Morgan Stanley
November 20, 2007: 10:24 PM EST

Nov. 20, 2007 (Thomson Financial delivered by Newstex) --

BEIJING (XFN-ASIA) - The Chinese stock market bubble is at 'full size' and the next wave of negative news could put it at risk of bursting, Morgan Stanley (NYSE:MS) said.

If it does burst, the performance of Chinese companies, propped up by stock market gains, could suffer dramatically, it said.

'As the A-share market is already struggling to justify its current valuation and sentiment starts to turn sour, any potential negative news could accelerate the correction and push the snowball downhill,' Morgan Stanley said in a note to clients.

The A-share Shanghai and Shenzhen 300 Index have already corrected 10 pct since Sept 30.

'Considering the market has already started its correction and even if the market stays flat from here, the fourth quarter could still result in investment losses on the income statement,' the investment bank said.

A flat market for the remainder of the year would still lead to 6 bln yuan of investment losses for 1,446 non-insurers, which could cut their growth by 10 pct, Morgan Stanley estimated.

After stripping out investment income and non-operational income, earnings per share growth of non-insurers fell to 35 pct in the third quarter from 48 pct in the first half of the year, it noted.

Although the nominal market 2007 price to earnings (PE) is 39 times, the core PE after stripping out investment and non-operational incomes is as high as 50.

'(This is) clearly a full sized bubble already,' Morgan Stanley said.
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Old 23rd November 2007, 05:04 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Even if the companies are making Sweet FA, the investments are probably going to be justified by future currency realignments, which is one of the reasons there is a lot of demand for Chinese stocks. The Government has also been working hard to choke demand. If things start to slow down they have a lot of room to play with. By contrast Ben Bernanke is relying on talking stability into US markets. This may just be part of a wider US policy to try to prop the dollar with BS.
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Old 23rd November 2007, 05:06 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Looks like i need to develop this one quick-smart 泡沫经济.com (EconomyBubble.com)
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Old 23rd November 2007, 05:49 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Quote:
Originally Posted by mgrohan
Looks like i need to develop this one quick-smart 泡沫经济.com (EconomyBubble.com)

Or maybe stockbubble.com.

Click to see CSI 300 chart -

This is the dow jones index equivalent of shanghai stock exchange, the Nasdaq equivalent will look like a zero to infinity chart... :o

Last edited by touchring; 23rd November 2007 at 06:02 AM..
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Old 23rd November 2007, 06:45 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Stanley

Yes, there probably is a 'bubble' at the moment, but the underlying growth in China can not be ignored!
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Old 23rd November 2007, 07:10 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Quote:
Originally Posted by blackops
Yes, there probably is a 'bubble' at the moment, but the underlying growth in China can not be ignored!

Gas, transport and utilities are heavily subsidized in China.

Rising oil prices is forcing the CCP to cool inflation, hard landing or not.


The situation is changing by the day, in China events unfold in weeks, not the months it takes in the US.

Can you imagine if US papers report: New York home prices drop 5.87% last week? :o

Shanghai home prices drop 5.87% last week

http://www.china.org.cn/english/business/232789.htm

Last edited by touchring; 23rd November 2007 at 07:16 AM..
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Old 23rd November 2007, 07:21 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

I think one week the dollar will have dropped by that amount. Doesn't that amount to the same thing!

Quote:
Originally Posted by touchring
Gas, transport and utilities are heavily subsidized in China.

Rising oil prices is forcing the CCP to cool inflation, hard landing or not.


The situation is changing by the day, in China events unfold in weeks, not the months it takes in the US.

Can you imagine if US papers report: New York home prices drop 5.87% last week? :o

Shanghai home prices drop 5.87% last week

http://www.china.org.cn/english/business/232789.htm
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Old 23rd November 2007, 07:40 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Quote:
Originally Posted by Rubber Duck
I think one week the dollar will have dropped by that amount. Doesn't that amount to the same thing!

The dollar dropped because interest rates has tobe lowered to save American home owners.

Two months ago, I already anticipated that the CCP will deflate the bubble before year end. They can no longer wait till Beijing 2008. This myth is broken.

The fact they are willing to deflate the bubble before it dies a natural death is good news. It takes great political will and authoritarian control to deflate a bubble before it runs its natural course.

Last edited by touchring; 23rd November 2007 at 08:06 AM..
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Old 27th March 2008, 08:20 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Status check, barely 4 mths later.

Anyone bought china linked etf or mutual funds? if you haven't checked the price last 3 mths, pls do now.

Disclaimer: i shall not be held responsible should u have a heart seizure after checking the price.


Here's the latest shanghai composite index chart:

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Old 27th March 2008, 08:26 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Yep, with stress in the US market and the need to reign in inflation, growth in China could easily dip below 10% this year. :p

Quote:
Originally Posted by touchring
Status check, barely 4 mths later.

Anyone bought china linked etf or mutual funds? if you haven't checked the price last 3 mths, pls do now.

Disclaimer: i shall not be held responsible should u have a heart seizure after checking the price.


Here's the latest shanghai composite index chart:

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Old 27th March 2008, 08:51 AM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Sta

Quote:
Originally Posted by Rubber Duck
Yep, with stress in the US market and the need to reign in inflation, growth in China could easily dip below 10% this year. :p

The us didn't end when nasdaq dropped from 6000 points to 1000 points. If shanghai drops to 1000 points, i'll be on a busy shopping trip.
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Old 27th March 2008, 12:06 PM
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Re: CNNmoney - China bubble poised to burst on next negative development - Morgan Stanley

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