Shanghai sell-off

PDelux

Remember the 9% sell-off in the Shanghai index in China last month
that caused all the other markets to fall around the world?
Well it's up 27% since then!

A Random Walk

Shows you need a strong nerve when investing in emerging markets - I expect the rollercoaster ride to continue for many years

Time Magazine

Jesus that's some bounce.

PDelux

The Shangai index has closed over 4000!
That's another 14% increase since last month...tis bleedin mad.

bloodninja

Whats the best way to get invested on it...U've converted me man

A Random Walk

bloodninja wrote:

Whats the best way to get invested on it...U've converted me man

You shouldn't be investing in anything after it's gone up, it's when something has gone down you should be thinking of investing

Short answer is you can't, only Chinese are allowed to invest in Shanghai. Thankfully really, it's yet another bubble.

damnyanks

A Random Walk wrote:

You shouldn't be investing in anything after it's gone up, it's when something has gone down you should be thinking of investing

Short answer is you can't, only Chinese are allowed to invest in Shanghai. Thankfully really, it's yet another bubble.

No its better to invest when there is a likelyhood of a return If something drops in price there is a reason.

Blackjack

A Random Walk wrote:

Short answer is you can't, only Chinese are allowed to invest in Shanghai. Thankfully really, it's yet another bubble.

That's not entirely true. B shares are open to Foreign Investors and A shares are available to Foreign Investors via a QFII structure. However it's not for the ordinary Joe on the Street (i.e. Individual investors) and the application process is not straightforward.

You can access the B shares usually via some forms of OEIC or Unit Trusts, can't say for sure for the A shares, but I do know that QFII applications are awkward to say the least.

A Random Walk

Blackjack wrote:

You can access the B shares usually via some forms of OEIC or Unit Trusts, can't say for sure for the A shares, but I do know that QFII applications are awkward to say the least.

Fair enough. As I understand it there are three levels, you might let us know if this is incorrect.

Chinese shares listed on foreign exchanges (particularly US) - traditionally the best companies as the Chinese government has to approve and they are cognisant of their image. You'll usually pay a hefty price for them however. Chinese residents cannot purchase.

H shares are traded in Hong Kong and foreigners can buy. ETFs or similar vehicles are what non-professional investors are typically using to invest. The second tier of companies. Chinese residents cannot purchase.

A&B shares open to Chinese residents only (or as you say limited foreign involvement) and quoted in Shanghai. A real wild west of companies and a mania of purchasing currently. Absurd valuations for the most part.

While all the varieties of shares have done well over the past 2 years or so, only the A shares have tripled.

Blackjack

A Random Walk wrote:

Fair enough. As I understand it there are three levels, you might let us know if this is incorrect.

Chinese shares listed on foreign exchanges (particularly US) - traditionally the best companies as the Chinese government has to approve and they are cognisant of their image. You'll usually pay a hefty price for them however. Chinese residents cannot purchase.

H shares are traded in Hong Kong and foreigners can buy. ETFs or similar vehicles are what non-professional investors are typically using to invest. The second tier of companies. Chinese residents cannot purchase.

A&B shares open to Chinese residents only (or as you say limited foreign involvement) and quoted in Shanghai. A real wild west of companies and a mania of purchasing currently. Absurd valuations for the most part.

While all the varieties of shares have done well over the past 2 years or so, only the A shares have tripled.

I'm afraid not really au-fait with the rules for Chinese Domestic investors, they're not really something I've come across that much, they may well be prevented from investing in the US or HK.

There would however be very little in the way of US legislation preventing a Chinese domestic investore from investing in a US listed security, however Chinese domestic law may indeed prevent this. I do know that on the HKSE and GEM exchanges there are no Foreign ownership restrictions.

As regards the absurd valuations, you are indeed correct. There was an interesting article in todays FT (front page) showing how the Domestic interest rates being so low are motivating people to invest in the Domestic securities, leading to prices being sometimes up to 50 times earnings. A worrying bubble given the Global reaction to the selloff in March.

Interestingly the turnover on the Chinese Bourses exceeded that of London, or that of the rest of Asia.

PDelux

Whats the best way to get invested on it...U've converted me man

It probably sounds like i was promoting it or bragging about it but I have no investments linked to it.. i just thought it was pretty amaznig and might get a discussion goin on it.

It is a pretty big bubble, up about 300% since mid 2005... but some people would have said stay away from it when it was up 100%, 200% so who knows how far it can go.

I have an interest in technical analysis as well. If you look at the chart for 1 year with 50 day moving average you can see that when the fall happened in early Feb it bounced off this line. Back in August last year as well you see it perfectly bounced off the 100 MA. This is why you tend to see a rally of these points on strong trending stocks, because people who missed the boat see it as a chance to get in on the trend.