${log.root}/lowem.log
Inflation, Investing and Everything


All | Energy | Java | Tech | Musings | Env | Biz

AddThis Feed Button
20070530 Wednesday May 30, 2007

Chinese investors flood overheated stock market

scrippsnews.com :

The Shanghai CSI 300 index has climbed an astounding 206% in the past year. Despite strong warnings from former Federal Reserve chairman Alan Greenspan and a host of other experts, Chinese investors continue to pour into the stock market. Last week, they opened more than 300,000 new accounts at brokerages every day and have already opened more than 20 million new accounts so far this year, four times the number of accounts opened last year. The new investors helped set a new peak for trading volume at the two major Chinese stock markets, in Shanghai and Shenzhen - the value of shares traded jumped by 17% to reach a record $50.9-billion Monday - putting China in the same league as the New York Stock Exchange in terms of recent volume.

Last week, Greenspan said the Chinese stock rally is unsustainable and could suffer a "dramatic contraction" in the near future. China's central bank governor, Zhou Xiaochuan, and Asia's wealthiest tycoon, Li Ka-shing, have both issued similar predictions of a bubble in the Chinese stock market. Yale University economics professor Robert Shiller, an expert on global markets, warned that China was experiencing "irrational exuberance" and could be facing a major correction in the next few months. "It could even spark a worldwide recession," he said.

But at trading halls in Chinese brokerages, no one seems worried by the predictions. The stock boom has attracted a flood of new money from millions of newcomers to the market, including elderly pensioners, students, maids, security guards, Buddhist monks, taxi drivers, and even young schoolchildren. A group of 9-year-old students at a primary school in Nanjing is among the latest stock investors. Some Chinese investors are borrowing large sums of money or pawning their possessions to gain money for buying shares.

- When pensioners, security guards, cleaning ladies, and 9-year-old students try to get into the stock market, the crash can't be too far behind. This is starting to sound eerily like 1929, just before the (first) Great Depression, when bellboys, doormen and parking attendants were trying to get into the stock markets too.

As some wise ones have said, history doesn't really repeat itself, but it often rhymes. "This time is different," the not-so-wise ones have often retorted. Famous last words.

See also :

1. Bank queues in China

(2007-05-30 12:56:57 SGT) [Biz] Permalink

Comments:

Post a Comment:

Comments are closed for this entry.

Your Ad Here


Most popular blog postings on lowem.log :

1. Singapore MRT rail network length to double by 2020
2. 2010 Nissan Leaf electric car specifications : 107hp, 24KWh lithium-ion batteries, 100-mile range
3. Live spot gold price quotes chart on COMEX
4. 2010 Toyota Prius specifications released : 50 mpg, 1.8L, 134hp, Ni-MH, solar roof option
5. AVG Anti-Virus Free Edition 2011 direct download link
6. Real-time live gold and silver price quotes chart on COMEX
7. Singapore electric vehicles : Government agencies EMA and LTA to study EV introduction
8. Book review : Shut Down by William Flynn

Featured articles on lowem.log :

1. Book review : Shut Down by William Flynn
2. Singapore electric cars testing starts with 9 electric vehicles
3. Honda, GS Yuasa JV to make lithium-ion batteries for 2010/2011 Honda Civic Hybrid
4. 2010 Honda Civic Hybrid preliminary specifications released
5. 2010 Honda CR-Z hybrid, 2010 Honda Fit/Jazz hybrid models confirmed
6. 2010 Toyota Prius specifications released : 50 mpg, 1.8L, 134hp, Ni-MH, solar roof option
7. NYMEX crude oil recovers from $32.40 low after 2.2 mbpd OPEC production cut announced
8. Singapore : Nuclear power not ruled out



search
sponsored links


bookmarks

about
my profile
contact me

blogroll
biow/ken/wenn
reviewem
dividend investing

sites
photo gallery
wiki

quotes
live oil prices
live gold prices

charts
live forex rates
live oil chart
live brent crude chart
live gold chart
live silver chart

historical
crude oil chart
gold chart
silver chart


navigation
decals

Click for Singapore, Singapore Forecast





rss feed for lowem.log

Get Firefox!

powered by
hosted by