June 17, 2008
The Unshortable Cascade
There are no stock index futures in China so it’s impossible to take advantage of the dramatic decline underway here. This is the 15-minute chart — the weekly and daily trends are all down so it’s just a matter of hitting it every time it reverses on the smaller time frames. Sadly there is no way to short.
Cat: | Time: 5:55 pm (utc+8)
June 17th, 2008 at 7:07 pm
How does this end up, do you think?
Lost decade like Japan, or something better?
June 17th, 2008 at 7:35 pm
FXI, or FXP are the closest securities I can think of.
Also, I’ve currently got a put cal spread on CHL
June 17th, 2008 at 8:40 pm
@anon: No idea, I’m not a macro guy, that’s a 15-minute chart, lol.
@Steve: I’d like exposure to all the junk listed on the A-share exchange… the FXI is a group of the best of the best if you see what I mean.
June 18th, 2008 at 12:10 am
You can short CAF which is Morgan Stanley’s China ETF. It is down 50% last 12 months.
June 18th, 2008 at 2:26 am
CAF’s charter is to invest in mostly A-share securities as well…
June 18th, 2008 at 2:45 am
Hong Kong has the Hang Seng Index futures - not sure if this is something close to what you’re looking for.
June 18th, 2008 at 2:53 am
The rumor is that the preparation for stock index future, margin and short are all underway. Without these vehicles, it is boring in A-Shares. On the other hand, Chairman, you could hang out and bring us more A.R.T. :-)
June 18th, 2008 at 6:50 am
@Lawrence & Dan: I’m aware of CAF but haven’t checked how well it tracks the A-shares, maybe I’ll look into that today and write a post about it.
@Brant: I know about the futures offered in Hong Kong but that’s a completely different market.
@Jay: They’ve been saying all that for years and years now, but never act (the same story for many desperately needed reforms here).
June 18th, 2008 at 9:12 am
I think they get more serious this time. But now, buying IPO’s in auction is the only safe bet.
June 18th, 2008 at 9:48 am
Jay: I doubt that they’re going to begin to allow short-selling as the market continues to collapse … the time for that reform was last year when everyone was riding high and even my manicurist’s net worth (briefly) surpassed my own.
June 18th, 2008 at 11:39 am
If they allowed short sales, there would be more volatility and more countertrend rallies. With no buyers (either longs or covering shorts) it’s just one slow march to the bottom.
June 18th, 2008 at 12:12 pm
Prospectus: Yes, that’s probably true. Short selling should be strongly encouraged and supported by everyone, including regulators. It makes for a much healthier market.
June 18th, 2008 at 4:31 pm
Every strange thing happens in the unshortable market can be applied by the big-fish-vs-small-fry theory. The big fish is the market operator and player two as one. If a new drug can promote the efficiency of the small fry so that it can escape from the big fish more quickly, will the big fish approve it?