Posted on 05/09/2007 1:25:39 PM PDT by alnitak
HONG KONG - Mass movements are part of Chinese tradition. Chinese people tend to act as a group and, whenever conditions are ripe, they rush to join with someone or some group taking the lead. Hence a "mass movement" can be easily formed. In the 1960s and 1970s, there were the "all people becoming citizen-soldiers" movement and the Cultural Revolution launched by Mao Zedong. In the era of economic reform and opening up, "mass movements" appear to have become more spontaneous. In the 1980s, there was a time when "all people rushed to do commercial businesses". And now we are witnessing another mass movement: "all people speculating in stocks". Indeed, as the Shanghai and Shenzhen stock markets keep rising, more and more Chinese citizens join the army of speculators. On April 26, some 325,000 new investor accounts were opened on the single day, pushing the total number to 92.5 million. This means one out of every 14 mainland Chinese (including children and the aged) is now a player. This does not even include those who trade in shares through investment funds. Considering that 80% of the 1.3 billion Chinese are farmers, it may be safe to say that almost all urban adults are stock investors or speculators. A civil servant in Guangzhou, Wang, said 90% of the staff in his office bought and sold shares. "During the lunch break, all we talk about in our office is stocks. I have invested 20,000 yuan. With a big surge in the market, I can make more money on a single day than my monthly salary." A taxi driver in Shanghai said driving a cab has became his "part-time" job, as his "full-time" work is to "speculate in shares".
(Excerpt) Read more at atimes.com ...
"Irrational exuberance" anyone? Impossible to tell how much, if any, of this is journalistic exaggeration, but it sounds pretty scary...
BTW, when the auto-excerpt thing kicked in, it told me that I was using 1776 words, which I thought was kinda-neat!
Asia is growing, whether it’s real or hyped or a combination of both. You can make a lot of money in those stocks.
1.3 billion Chinese engaged in a “mass movement.”
That’s not something I want to think about.
If they are still low, it's not irrational exuberance...yet.
Well lemme tell you about WYPE, which is the Shanghai Stock Market trading symbol for a Chinese toilet paper manufacturer...
LOL. The sad truth, though, is that WYPE's not a possible ticker symbol, since Shanghai stocks are represented by several digit numbers.
* I have to say, though, that this latest mantra is a big improvement on recitations from Mao's Little Red Book. This, at least, has something of an air of practicality about it. What they are saying is that the game is rigged by the government, which isn't far from the literal truth.
= )
Unfortunately, the crash is also going to drag down all the other markets, like the US’s.
I'm not convinced. The mechanism for contagion is via shifts from capital market to capital market. Individual Chinese can't buy American stocks. Individual Americans can't buy Chinese stocks (except for a sliver traded in Hong Kong and via ADR's). The Chinese stock market isn't all that big, even at today's elevated valuations.
Of course, all the markets went back going up again, until the next time, of course.
What I've heard is that the US correction was related to real estate bubble fears, whereas the Chinese correction had to do with the tightening of lending standards. They just happened to be on the same day.
Kinda reminds me of the second half of the 90’s when I was day trading. Learned a few lessons!
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