Bigsky Investments®
  • Home
  • Equity Research
  • Blog
  • On Watch
  • Market Data
    • Portfolio
  • 🌲

China Weakness: A House of Cards

1/19/2015

0 Comments

 
Picture
There has been rampant maniacal speculative excess going on in China recently as their market broke out of a long term falling wedge and went parabolic. The Chinese people have been showing up to the party in droves opening up a record level of new margin trading accounts in a very short period of time.
 Just today however, the market received a small dose of reality as Chinese stocks plunge the most in six years after regulators begin cracking down on margin lending. 
'The Shanghai Composite Index sank 7.7 percent to 3,116.35 at the close, its steepest drop since June 2008.Citic Securities Co. (600030) and Haitong Securities Co., the nation’s two biggest listed securities firms, fell by the 10 percent daily limit after they were suspended from loaning money to new equity-trading clients and regulators said brokerages shouldn’t lend to investors with assets below 500,000 yuan. ' -Bloomberg
Picture
Picture
Underneath the mania of the stock market China is weakening. China has been seen as the beacon of global growth for a while now as the Chinese go nuts building new structures. Unfortunately their optimism of migrating the people from the farms to the cities isn't coming to fruition quite like they had hoped. In fact the Chinese have now ended up with the precarious situation of entire cities that are mostly vacant, Ghost Cities.
There is a massive supply glut of vacant property sitting in China right now and as a result, property values are beginning to decline putting Chinese real estate companies at default risk. 'Concern is mounting that increasing financial stress among builders could spill over into a broader credit crisis in China. New-home prices fell in 65 of the 70 cities monitored in December and were unchanged in four, the National Bureau of Statistics said in a statement yesterday.'
Picture
China is a net oil importer and I suspect that is partly why their markets have been doing well but it is wise to use caution as it appears as if China is in their own fragile bubble. The Chinese stock market has been gripped in a mania of speculative fury and the citizens all want in on  a piece of the action. I certainly cannot predict the future but from what I have gathered historically we see this kind of psychology much closer to significant market tops than bottoms. China has a lot more vacant property now but it looks as if the only thing they have manged to build is a House of Cards.
0 Comments



Leave a Reply.

    Picture

    R. J. Sullivan IV

    Equity Research
    Portfolio Management
    ​Trading

    Picture
    Picture

    Archives

    September 2019
    March 2019
    December 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    April 2018
    March 2018
    January 2018
    October 2017
    July 2017
    May 2017
    April 2017
    March 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    November 2013
    October 2013

    Categories

    All

    RSS Feed

© BIGSKY INVESTMENTS®​

DISCLAIMER: This is a personal web site, reflecting the opinions of its author(s). It is not a production of my employer, and it is unaffiliated with any FINRA broker/dealer. Statements on this site do not represent the views or policies of anyone other than myself. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities. DATA INFORMATION IS PROVIDED TO THE USERS "AS IS." NEITHER BIGSKY INVESTMENTS®, NOR ITS AFFILIATES, NOR ANY THIRD PARTY DATA PROVIDER MAKE ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND REGARDING THE DATA INFORMATION, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.