[carlsbadworker]

[quote=stockstradr]I guess my answer is that economic fundamentals will drive China’s stock markets, not the reverse.[/quote]

I have a different theory. When I look at China’s economy, the biggest issue that I have with it is its low capital efficiency:
http://www.imf.org/external/pubs/ft/wp/2007/wp0709.pdf
To make things worse, the stimulus plan China adopted after Lehman bankruptcy favors state-owned firm which have lower capital efficiency. As a result, China just needs an enormous amount of new investments to keep its engine running.
Therefore, I believe any sign of capital fleeing the country is going to predict a real crash. But Yuan has apparently stopped its appreciation after recent small move. The stock market index is appreciating. And I don’t have good enough data to tell what is happening to its property market. The Chinese banks are sitting on an enormous amount of non-performing loan, so that could drag the future investments. But so far, I still don’t have enough data to know that the investments are declining (or stop growing) in China.

So I will not make doomsday forecast as the wsj writer did…yet.

[carlsbadworker]

[quote=stockstradr]I guess my answer is that economic fundamentals will drive China’s stock markets, not the reverse.[/quote]

I have a different theory. When I look at China’s economy, the biggest issue that I have with it is its low capital efficiency:
http://www.imf.org/external/pubs/ft/wp/2007/wp0709.pdf
To make things worse, the stimulus plan China adopted after Lehman bankruptcy favors state-owned firm which have lower capital efficiency. As a result, China just needs an enormous amount of new investments to keep its engine running.
Therefore, I believe any sign of capital fleeing the country is going to predict a real crash. But Yuan has apparently stopped its appreciation after recent small move. The stock market index is appreciating. And I don’t have good enough data to tell what is happening to its property market. The Chinese banks are sitting on an enormous amount of non-performing loan, so that could drag the future investments. But so far, I still don’t have enough data to know that the investments are declining (or stop growing) in China.

So I will not make doomsday forecast as the wsj writer did…yet.

[carlsbadworker]

[quote=stockstradr]I guess my answer is that economic fundamentals will drive China’s stock markets, not the reverse.[/quote]

I have a different theory. When I look at China’s economy, the biggest issue that I have with it is its low capital efficiency:
http://www.imf.org/external/pubs/ft/wp/2007/wp0709.pdf
To make things worse, the stimulus plan China adopted after Lehman bankruptcy favors state-owned firm which have lower capital efficiency. As a result, China just needs an enormous amount of new investments to keep its engine running.
Therefore, I believe any sign of capital fleeing the country is going to predict a real crash. But Yuan has apparently stopped its appreciation after recent small move. The stock market index is appreciating. And I don’t have good enough data to tell what is happening to its property market. The Chinese banks are sitting on an enormous amount of non-performing loan, so that could drag the future investments. But so far, I still don’t have enough data to know that the investments are declining (or stop growing) in China.

So I will not make doomsday forecast as the wsj writer did…yet.

[carlsbadworker]

[quote=stockstradr]I guess my answer is that economic fundamentals will drive China’s stock markets, not the reverse.[/quote]

I have a different theory. When I look at China’s economy, the biggest issue that I have with it is its low capital efficiency:
http://www.imf.org/external/pubs/ft/wp/2007/wp0709.pdf
To make things worse, the stimulus plan China adopted after Lehman bankruptcy favors state-owned firm which have lower capital efficiency. As a result, China just needs an enormous amount of new investments to keep its engine running.
Therefore, I believe any sign of capital fleeing the country is going to predict a real crash. But Yuan has apparently stopped its appreciation after recent small move. The stock market index is appreciating. And I don’t have good enough data to tell what is happening to its property market. The Chinese banks are sitting on an enormous amount of non-performing loan, so that could drag the future investments. But so far, I still don’t have enough data to know that the investments are declining (or stop growing) in China.

So I will not make doomsday forecast as the wsj writer did…yet.

[carlsbadworker]

[quote=stockstradr]I guess my answer is that economic fundamentals will drive China’s stock markets, not the reverse.[/quote]

I have a different theory. When I look at China’s economy, the biggest issue that I have with it is its low capital efficiency:
http://www.imf.org/external/pubs/ft/wp/2007/wp0709.pdf
To make things worse, the stimulus plan China adopted after Lehman bankruptcy favors state-owned firm which have lower capital efficiency. As a result, China just needs an enormous amount of new investments to keep its engine running.
Therefore, I believe any sign of capital fleeing the country is going to predict a real crash. But Yuan has apparently stopped its appreciation after recent small move. The stock market index is appreciating. And I don’t have good enough data to tell what is happening to its property market. The Chinese banks are sitting on an enormous amount of non-performing loan, so that could drag the future investments. But so far, I still don’t have enough data to know that the investments are declining (or stop growing) in China.

So I will not make doomsday forecast as the wsj writer did…yet.

[carlsbadworker]

stockstradr, although I agree with your sentimental on the world economy, all your trades are betting that the market has only one direction to go. Have you noticed that Shanghai index is creeping up recently? If the major economic crash is irreversible now, wouldn’t one predict that it should drop? Bernanke’s Fed is creating a long, steady incentive to borrow and speculate. I don’t think it will have major effects on the economy (including unemployment), but it could have major effects on financial players (e.g. banks and hedge funds) to be more aggressive and speculative. The carry trade could allow the Shanghai index to climb up over 3K easily. And other markets could follow because China is really the growth engine of the world at the moment.

[carlsbadworker]

stockstradr, although I agree with your sentimental on the world economy, all your trades are betting that the market has only one direction to go. Have you noticed that Shanghai index is creeping up recently? If the major economic crash is irreversible now, wouldn’t one predict that it should drop? Bernanke’s Fed is creating a long, steady incentive to borrow and speculate. I don’t think it will have major effects on the economy (including unemployment), but it could have major effects on financial players (e.g. banks and hedge funds) to be more aggressive and speculative. The carry trade could allow the Shanghai index to climb up over 3K easily. And other markets could follow because China is really the growth engine of the world at the moment.

[carlsbadworker]

stockstradr, although I agree with your sentimental on the world economy, all your trades are betting that the market has only one direction to go. Have you noticed that Shanghai index is creeping up recently? If the major economic crash is irreversible now, wouldn’t one predict that it should drop? Bernanke’s Fed is creating a long, steady incentive to borrow and speculate. I don’t think it will have major effects on the economy (including unemployment), but it could have major effects on financial players (e.g. banks and hedge funds) to be more aggressive and speculative. The carry trade could allow the Shanghai index to climb up over 3K easily. And other markets could follow because China is really the growth engine of the world at the moment.

[carlsbadworker]

stockstradr, although I agree with your sentimental on the world economy, all your trades are betting that the market has only one direction to go. Have you noticed that Shanghai index is creeping up recently? If the major economic crash is irreversible now, wouldn’t one predict that it should drop? Bernanke’s Fed is creating a long, steady incentive to borrow and speculate. I don’t think it will have major effects on the economy (including unemployment), but it could have major effects on financial players (e.g. banks and hedge funds) to be more aggressive and speculative. The carry trade could allow the Shanghai index to climb up over 3K easily. And other markets could follow because China is really the growth engine of the world at the moment.

[carlsbadworker]

stockstradr, although I agree with your sentimental on the world economy, all your trades are betting that the market has only one direction to go. Have you noticed that Shanghai index is creeping up recently? If the major economic crash is irreversible now, wouldn’t one predict that it should drop? Bernanke’s Fed is creating a long, steady incentive to borrow and speculate. I don’t think it will have major effects on the economy (including unemployment), but it could have major effects on financial players (e.g. banks and hedge funds) to be more aggressive and speculative. The carry trade could allow the Shanghai index to climb up over 3K easily. And other markets could follow because China is really the growth engine of the world at the moment.

[carlsbadworker]

People need to understand: foreclosure is not the problem; foreclosure is the solution.
A housing bust is only devastating because it reflects the huge mis-allocation of capital during the housing boom.

[carlsbadworker]

People need to understand: foreclosure is not the problem; foreclosure is the solution.
A housing bust is only devastating because it reflects the huge mis-allocation of capital during the housing boom.

[carlsbadworker]

People need to understand: foreclosure is not the problem; foreclosure is the solution.
A housing bust is only devastating because it reflects the huge mis-allocation of capital during the housing boom.

[carlsbadworker]

People need to understand: foreclosure is not the problem; foreclosure is the solution.
A housing bust is only devastating because it reflects the huge mis-allocation of capital during the housing boom.

[carlsbadworker]

People need to understand: foreclosure is not the problem; foreclosure is the solution.
A housing bust is only devastating because it reflects the huge mis-allocation of capital during the housing boom.

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