Hundreds of Billions of Dollars Are About to Flow into Chinese Stocks By Dr. Steve Sjuggerud
China will ultimately make up 50% of one of the world's major emerging-markets indexes…
"Who cares," you might think, at first…
YOU ought to care…
You see, hundreds of billions of dollars will flow into Chinese stocks in the next two or three years…
That's because trillions of dollars are invested based on what's in these major stock indexes… If the index dramatically increases its stake in China, then index-based investors will have to move money into China. The amount of money moving in, ultimately, will be in the hundreds of billions of dollars.
For the specifics…
This week, FTSE Russell (one of two leading providers of international stock market indexes) announced big changes to its emerging-markets index. It plans to dramatically increase China's percentages over the next two to three years.
According to a Reuters news story, the new FTSE emerging-markets indexes "will have an initial weighting of 5 percent for China A shares. That will rise to 32 percent when the shares become fully available to international investors." That is a massive change!
"When taken together with other types of China shares, including those listed in Hong Kong, Chinese shares would then account for 50 percent of the emerging-markets index, said FTSE Russell. It has scheduled an update of its plans in September."
My paid subscribers have been profiting handsomely from my China ideas already…
We are up 112% in eight months on our main China stock recommendation. Now that China has soared so much, in the latest issue of my True Wealth letter I've shared the specifics of a surprising, lower-risk way to profit from all the money that will flow into China.
Regardless of how you're investing in China, this decision by FTSE Russell means hundreds of billions of dollars will flow into Chinese stocks.
So even though Chinese stocks are up a lot, your upside potential is still dramatic. Make sure you're on board…
Source: Daily Wealth
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China - Market Direction 01 (May 12 - Jul 15)
Re: China - Market Direction
by winston » Fri May 29, 2015 11:07 am
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: China - Market Direction
by behappyalways » Sat May 30, 2015 1:40 pm
Share prices in China: Flying too high
The long-term consequences of China’s coming stockmarket correction are the ones to fear
IF YOU were a Chinese worker you could have spent the past year toiling to earn a living. Or you could have bought some shares and sat on the sofa (see article). Chinese equities have been on a bull run of epic proportions.
The CSI300, an index of the biggest mainland stocks, has more than doubled over the past year. That looks positively anaemic compared with ChiNext, a market for Chinese startups which has tripled in 12 months; let alone with shares in Qtone, an online-education company that gained almost 1,300% between its listing early in 2014 and the middle of this month. Its own directors have warned investors to be wary of “ignorant hype”.
The signs of overvaluation are everywhere. Stocks listed on the Shenzhen exchange, home to most tech firms, have an average price-earnings ratio of 64; for those on the exchange for small and medium-sized enterprises it is 80. (For most stocks a P-E ratio above 25 is considered expensive.) ChiNext is now priced at nearly 140 times last year’s earnings, a valuation that puts it in the same league as NASDAQ, America’s tech-heavy exchange, at the height of the dotcom frenzy.
Companies whose shares are listed in Hong Kong and in Shanghai are trading at a 30% premium in the mainland, near a four-year high. Some are twice as valuable in China, even though mainland money can now more easily slosh southward into the Hong Kong market.
How a Chinese crash could hurt the economy
Retail investors, long the “greater fools” of stockmarket booms and busts, are piling in. In a single week in April, Chinese punters opened more than 4m new brokerage accounts. More than two-thirds of newcomers to the market left school before the age of 15, according to one study. Construction companies that have rebranded themselves as high-tech firms have seen their shares double.
The markets are plainly soaring too high. At some point they will crash. Predicting exactly when is a fool’s errand, but the warning signs are accumulating. Recent violent lurches in the share prices of Hanergy and Goldin, two Chinese firms listed in Hong Kong, may have been early signs of trouble. Housing markets in big cities are heating up again: that will probably lead investors to turn away from equities and back to property.
Even the Chinese authorities have started warning of risks, though whenever the market has shown signs of correcting in the past they have lost their nerve and talked up share prices. More important than guessing when the crash will come, however, is the question of how serious its economic effects will be. Paradoxically, these are likely to be more damaging over the long term than the short.
Rally drivers
The near-term fallout will be painful for some, to be sure. If the market crashes, aggressive investors, whether individuals or firms, will find themselves in trouble. Many Chinese people have bought shares using borrowed money. The amount of margin financing, whereby investors borrow from brokers and put up extra collateral if the price moves against them, has more than quintupled over the past year to 2 trillion yuan ($325 billion).
Adding up other forms of debt financing, Credit Suisse estimates that credit-financed share purchases have reached as much as 9% of market capitalisation, five times higher than the level in most developed markets.
Even so, the effect of a correction on the economy will be less dramatic than the bursting of a similar bubble in America or Europe. China’s bourses are small relative to the size of the economy. The free-float market capitalisation is about 40% of GDP; the frothy ChiNext market is worth less than 10% of GDP.
In most developed markets the equivalent figure is more than 100%. As a result, the stockmarket bonanza has been less important to China’s growth than often imagined. Many had thought the rally would lead to more consumption as investors felt richer. In fact, households have allocated less than 10% of their wealth to shares.
The mechanics of a stockmarket reversal may also mute its impact. Hong Kong’s markets have no “circuit-breakers”—built-in limits on how far a stock can rise or fall without a suspension of trading—which helps explain the stomach-churning movements in Hanergy’s and Goldin’s shares. By contrast, the mainland market restricts gains and falls to a daily maximum of 10%, which means a downward correction will be a long spiral rather than a vertiginous drop.
Crash or big bang
More worrying is the lengthy shadow that a crash could cast over the development of China’s equity markets. History does not bode well. After the country’s last stockmarket bust, in 2007, share prices stagnated for nearly seven years. Investors lost faith; regulators slowed, and then froze, listings.
A similar chill today would be far costlier, for two reasons. First, the Chinese economy has depended disproportionately on borrowing in recent years: total debt has jumped from about 150% of GDP in 2008 to more than 250% today. More equity financing is needed to diversify the mix of corporate funding, and to take the pressure off a banking system that is weighed down by dud loans.
Second, it could slow the pace of financial liberalisation. Chinese regulators have made impressive progress recently—for example, by freeing the rates that banks charge for loans and dangle on savings products, and by relaxing capital controls. A bust might deter them from pressing ahead with more market-based policies.
That would be a mistake. More market reforms, not fewer, are needed to put China’s stockmarket on a sounder footing. Making it easier to short stocks would enable sceptical investors to put downward pressure on ballooning shares. Giving mainland punters more access to foreign stock exchanges would drain some of the speculative cash from China.
Speeding up listing processes would ensure that the supply of equities can rise to meet surging demand; otherwise money just chases the existing pool of stocks. China cannot eliminate booms and busts from its financial markets, but it can remove the distortions that make them all too common.
Source: The Economist
The long-term consequences of China’s coming stockmarket correction are the ones to fear
IF YOU were a Chinese worker you could have spent the past year toiling to earn a living. Or you could have bought some shares and sat on the sofa (see article). Chinese equities have been on a bull run of epic proportions.
The CSI300, an index of the biggest mainland stocks, has more than doubled over the past year. That looks positively anaemic compared with ChiNext, a market for Chinese startups which has tripled in 12 months; let alone with shares in Qtone, an online-education company that gained almost 1,300% between its listing early in 2014 and the middle of this month. Its own directors have warned investors to be wary of “ignorant hype”.
The signs of overvaluation are everywhere. Stocks listed on the Shenzhen exchange, home to most tech firms, have an average price-earnings ratio of 64; for those on the exchange for small and medium-sized enterprises it is 80. (For most stocks a P-E ratio above 25 is considered expensive.) ChiNext is now priced at nearly 140 times last year’s earnings, a valuation that puts it in the same league as NASDAQ, America’s tech-heavy exchange, at the height of the dotcom frenzy.
Companies whose shares are listed in Hong Kong and in Shanghai are trading at a 30% premium in the mainland, near a four-year high. Some are twice as valuable in China, even though mainland money can now more easily slosh southward into the Hong Kong market.
How a Chinese crash could hurt the economy
Retail investors, long the “greater fools” of stockmarket booms and busts, are piling in. In a single week in April, Chinese punters opened more than 4m new brokerage accounts. More than two-thirds of newcomers to the market left school before the age of 15, according to one study. Construction companies that have rebranded themselves as high-tech firms have seen their shares double.
The markets are plainly soaring too high. At some point they will crash. Predicting exactly when is a fool’s errand, but the warning signs are accumulating. Recent violent lurches in the share prices of Hanergy and Goldin, two Chinese firms listed in Hong Kong, may have been early signs of trouble. Housing markets in big cities are heating up again: that will probably lead investors to turn away from equities and back to property.
Even the Chinese authorities have started warning of risks, though whenever the market has shown signs of correcting in the past they have lost their nerve and talked up share prices. More important than guessing when the crash will come, however, is the question of how serious its economic effects will be. Paradoxically, these are likely to be more damaging over the long term than the short.
Rally drivers
The near-term fallout will be painful for some, to be sure. If the market crashes, aggressive investors, whether individuals or firms, will find themselves in trouble. Many Chinese people have bought shares using borrowed money. The amount of margin financing, whereby investors borrow from brokers and put up extra collateral if the price moves against them, has more than quintupled over the past year to 2 trillion yuan ($325 billion).
Adding up other forms of debt financing, Credit Suisse estimates that credit-financed share purchases have reached as much as 9% of market capitalisation, five times higher than the level in most developed markets.
Even so, the effect of a correction on the economy will be less dramatic than the bursting of a similar bubble in America or Europe. China’s bourses are small relative to the size of the economy. The free-float market capitalisation is about 40% of GDP; the frothy ChiNext market is worth less than 10% of GDP.
In most developed markets the equivalent figure is more than 100%. As a result, the stockmarket bonanza has been less important to China’s growth than often imagined. Many had thought the rally would lead to more consumption as investors felt richer. In fact, households have allocated less than 10% of their wealth to shares.
The mechanics of a stockmarket reversal may also mute its impact. Hong Kong’s markets have no “circuit-breakers”—built-in limits on how far a stock can rise or fall without a suspension of trading—which helps explain the stomach-churning movements in Hanergy’s and Goldin’s shares. By contrast, the mainland market restricts gains and falls to a daily maximum of 10%, which means a downward correction will be a long spiral rather than a vertiginous drop.
Crash or big bang
More worrying is the lengthy shadow that a crash could cast over the development of China’s equity markets. History does not bode well. After the country’s last stockmarket bust, in 2007, share prices stagnated for nearly seven years. Investors lost faith; regulators slowed, and then froze, listings.
A similar chill today would be far costlier, for two reasons. First, the Chinese economy has depended disproportionately on borrowing in recent years: total debt has jumped from about 150% of GDP in 2008 to more than 250% today. More equity financing is needed to diversify the mix of corporate funding, and to take the pressure off a banking system that is weighed down by dud loans.
Second, it could slow the pace of financial liberalisation. Chinese regulators have made impressive progress recently—for example, by freeing the rates that banks charge for loans and dangle on savings products, and by relaxing capital controls. A bust might deter them from pressing ahead with more market-based policies.
That would be a mistake. More market reforms, not fewer, are needed to put China’s stockmarket on a sounder footing. Making it easier to short stocks would enable sceptical investors to put downward pressure on ballooning shares. Giving mainland punters more access to foreign stock exchanges would drain some of the speculative cash from China.
Speeding up listing processes would ensure that the supply of equities can rise to meet surging demand; otherwise money just chases the existing pool of stocks. China cannot eliminate booms and busts from its financial markets, but it can remove the distortions that make them all too common.
Source: The Economist
血要热 头脑要冷 骨头要硬
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Re: China - Market Direction
by winston » Tue Jun 02, 2015 6:36 am
According to data compiled by consultancy Z-Ben Advisors, Chinese mutual FUNDS raised roughly 300 billion yuan (HK$375.3 billion) last month, 15 times more than a year earlier.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: China - Market Direction
by winston » Tue Jun 02, 2015 8:04 am
Hundreds of billions of dollars are about to flow here by Dr. Steve Sjuggerud
China will ultimately make up 50% of one of the world’s major emerging-markets indexes…
“Who cares,” you might think, at first…
YOU ought to care…
You see, hundreds of billions of dollars will flow into Chinese STOCKS in the next two or three years…
That’s because trillions of dollars are INVESTED based on what’s in these major stock indexes… If the index dramatically increases its stake in China, then index-based investors will have to move money into China. The amount of money moving in, ultimately, will be in the hundreds of billions of dollars.
For the specifics…
Last week, FTSE Russell (one of two leading providers of international STOCK MARKET indexes) announced big changes to its emerging-markets index. It plans to dramatically increase China’s percentages over the next two to three years.
According to a Reuters news story, the NEW FTSE emerging-markets indexes “will have an initial weighting of 5 percent for China A SHARES. That will rise to 32 percent when the SHARES become fully available to international investors.” That is a massive change!
“When taken together with other types of China SHARES, including those listed in Hong Kong, Chinese shares would then account for 50 percent of the emerging-markets index, said FTSE Russell. It has scheduled an update of its plans in September.”
My paid subscribers have been profiting handsomely from my China ideas already…
We are up 112% in eight months on our main China stock recommendation. Now that China has soared so much, in the latest issue of my True Wealth letter I’ve shared the specifics of a surprising, lower-risk way to profit from all the money that will flow into China.
Regardless of how you’re INVESTING in China, this decision by FTSE Russell means hundreds of billions of dollars will flow into Chinese stocks.
So even though Chinese stocks are up a lot, your upside potential is still dramatic. Make sure you’re on board…
Source: Daily Crux
China will ultimately make up 50% of one of the world’s major emerging-markets indexes…
“Who cares,” you might think, at first…
YOU ought to care…
You see, hundreds of billions of dollars will flow into Chinese STOCKS in the next two or three years…
That’s because trillions of dollars are INVESTED based on what’s in these major stock indexes… If the index dramatically increases its stake in China, then index-based investors will have to move money into China. The amount of money moving in, ultimately, will be in the hundreds of billions of dollars.
For the specifics…
Last week, FTSE Russell (one of two leading providers of international STOCK MARKET indexes) announced big changes to its emerging-markets index. It plans to dramatically increase China’s percentages over the next two to three years.
According to a Reuters news story, the NEW FTSE emerging-markets indexes “will have an initial weighting of 5 percent for China A SHARES. That will rise to 32 percent when the SHARES become fully available to international investors.” That is a massive change!
“When taken together with other types of China SHARES, including those listed in Hong Kong, Chinese shares would then account for 50 percent of the emerging-markets index, said FTSE Russell. It has scheduled an update of its plans in September.”
My paid subscribers have been profiting handsomely from my China ideas already…
We are up 112% in eight months on our main China stock recommendation. Now that China has soared so much, in the latest issue of my True Wealth letter I’ve shared the specifics of a surprising, lower-risk way to profit from all the money that will flow into China.
Regardless of how you’re INVESTING in China, this decision by FTSE Russell means hundreds of billions of dollars will flow into Chinese stocks.
So even though Chinese stocks are up a lot, your upside potential is still dramatic. Make sure you’re on board…
Source: Daily Crux
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
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Re: China - Market Direction
by behappyalways » Tue Jun 02, 2015 12:44 pm
China stocks nearly a quarter overvalued: Credit Suisse
http://www.cnbc.com/id/102724075
http://www.cnbc.com/id/102724075
血要热 头脑要冷 骨头要硬
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Re: China - Market Direction
by winston » Thu Jun 04, 2015 6:55 am
Looking at fund flows, positive signs are emerging. Vanguard Group said it plans to add mainland-traded A SHARES to its broad emerging markets exchange-traded fund.
BAML said investors worldwide poured US$4.5 billion (HK$35.1 billion) into FUNDS that specialize in Chinese stocks in the week ended May 27.
If foreign fund managers are finally forced to increase their weighting in Chinese and Hong Kong-listed H shares, we should be glad and stay patient, holding on to our portfolio.
Source: Dr CHECK, The Standard HK
BAML said investors worldwide poured US$4.5 billion (HK$35.1 billion) into FUNDS that specialize in Chinese stocks in the week ended May 27.
If foreign fund managers are finally forced to increase their weighting in Chinese and Hong Kong-listed H shares, we should be glad and stay patient, holding on to our portfolio.
Source: Dr CHECK, The Standard HK
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
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Re: China - Market Direction
by winston » Thu Jun 04, 2015 7:45 pm
The Dumbest Man in China By Dr. Steve Sjuggerud
You can't make this stuff up…
"Stephen Qin, a 28-year-old office worker in northern China, traveled 1,000 miles and set up an account in Hong Kong… to trade Chinese stocks he could have bought at home," Bloomberg news reported this week.
His logic? "I can make more money if I can borrow more."
You see, Qin can borrow more money in Hong Kong to buy stocks than he can in China. (This is called buying on margin.) He also gets a lower interest rate in Hong Kong on that borrowed money.
Qin is not alone…
Thousands of Chinese investors are making the same "pilgrimage" to Hong Kong to open up brokerage accounts for the same reasons as Qin.
The Hong Kong brokerage firms are loving the influx of new business from mainland-Chinese investors. They are offering all kinds of incentives, including covering up to HK$10,000 of the travel costs from China for people opening accounts.
It's like a bizarre form of Las Vegas – where "the house" makes you feel good by comping your room… as long you spend money in its casino.
The story gets even more ridiculous…
Qin is excited about sitting at his computer in China and buying Chinese stocks through his Hong Kong brokerage online. For example, he recently bought Chinese shares of China Construction Bank. The thing is, the identical shares of China Construction Bank are 7% less expensive in Hong Kong than they are in China.
Qin drove 1,000 miles to Hong Kong… but instead of buying China Construction Bank shares that trade in Hong Kong, he bought the identical shares trading in China that were 7% more expensive!
As Qin's story shows, individual investors in China have lost all sense of reality…
The boom has finally reached the crazy stage. Just like in the U.S. housing boom a few years ago (that ended so badly), investors like Qin believe "I can make more money if I can borrow more."
Qin – and tens of thousands of other investors – will likely face the same fate American investors did in the housing bust.
The craziest part is, I'm not selling Chinese stocks yet…
The boom can (and likely will) get crazier before it's all over.
It will end – badly – at some point. A 50% fall would be nothing.
I just don't think we've hit the peak yet.
The difference between us and Mr. Qin is, we know that we are playing a game of chicken. We know that it will end and that Qin, with his borrowed money, will be wiped out.
Qin's story shows that Chinese stocks are reaching mania stage… but there could be much more fun ahead.
So we're not selling yet.
Source: Daily Wealth
You can't make this stuff up…
"Stephen Qin, a 28-year-old office worker in northern China, traveled 1,000 miles and set up an account in Hong Kong… to trade Chinese stocks he could have bought at home," Bloomberg news reported this week.
His logic? "I can make more money if I can borrow more."
You see, Qin can borrow more money in Hong Kong to buy stocks than he can in China. (This is called buying on margin.) He also gets a lower interest rate in Hong Kong on that borrowed money.
Qin is not alone…
Thousands of Chinese investors are making the same "pilgrimage" to Hong Kong to open up brokerage accounts for the same reasons as Qin.
The Hong Kong brokerage firms are loving the influx of new business from mainland-Chinese investors. They are offering all kinds of incentives, including covering up to HK$10,000 of the travel costs from China for people opening accounts.
It's like a bizarre form of Las Vegas – where "the house" makes you feel good by comping your room… as long you spend money in its casino.
The story gets even more ridiculous…
Qin is excited about sitting at his computer in China and buying Chinese stocks through his Hong Kong brokerage online. For example, he recently bought Chinese shares of China Construction Bank. The thing is, the identical shares of China Construction Bank are 7% less expensive in Hong Kong than they are in China.
Qin drove 1,000 miles to Hong Kong… but instead of buying China Construction Bank shares that trade in Hong Kong, he bought the identical shares trading in China that were 7% more expensive!
As Qin's story shows, individual investors in China have lost all sense of reality…
The boom has finally reached the crazy stage. Just like in the U.S. housing boom a few years ago (that ended so badly), investors like Qin believe "I can make more money if I can borrow more."
Qin – and tens of thousands of other investors – will likely face the same fate American investors did in the housing bust.
The craziest part is, I'm not selling Chinese stocks yet…
The boom can (and likely will) get crazier before it's all over.
It will end – badly – at some point. A 50% fall would be nothing.
I just don't think we've hit the peak yet.
The difference between us and Mr. Qin is, we know that we are playing a game of chicken. We know that it will end and that Qin, with his borrowed money, will be wiped out.
Qin's story shows that Chinese stocks are reaching mania stage… but there could be much more fun ahead.
So we're not selling yet.
Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 112617
- Joined: Wed May 07, 2008 9:28 am
Re: China - Market Direction
by behappyalways » Fri Jun 05, 2015 9:55 am
Shanghai Composite Index Tops 5,000 for First Time Since 2008
http://www.bloomberg.com/news/articles/ ... 8-iaixwtit
http://www.bloomberg.com/news/articles/ ... 8-iaixwtit
血要热 头脑要冷 骨头要硬
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Re: China - Market Direction
by behappyalways » Sat Jun 06, 2015 1:16 pm
[新闻夜班车-石家庄]图说天下 陕西“炒股村”：农民凌晨干活白天炒股
http://news.cntv.cn/2015/06/03/VIDE1433 ... 2962.shtml
http://news.cntv.cn/2015/06/03/VIDE1433 ... 2962.shtml
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