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August 8, 2008


What Goes 上 Must Come 下

In the last year, so many Chinese friends told me, “Chairman, the market can’t go down before the Olympics, the government won’t allow it.” I thought that was a nutty idea. Anyway, here’s a weekly chart of the CSI300 showing the amazing 630% rise beginning in 2005 (enjoyed by very few) and terrible 55% fall since last October (suffered by almost everyone, including my manicurist).

For Fibonacci fans, price is currently bumping around the golden retracement level (61.8%). If it falls through there, I don’t know what’s going to happen. Let’s just say that I’ve mapped the fastest routes to the airport and have my credit card and passport handy at all times.

This entry was posted on Friday, August 8th, 2008 at 3:09 pm (utc+8) and is filed under China, Investing.

10 Responses to “What Goes 上 Must Come 下”

  1. Markus said:
    August 8th, 2008 at 3:17 pm

    “fastest route to the airport…”

    CM,
    are you serious?

    Cheers,
    Markus

  2. C. Maoxian said:
    August 8th, 2008 at 3:20 pm

    Markus: No, of course not, the Chinese are very good at suffering, or 吃苦 “eating bitter” (a wonderful direct translation), and I don’t expect the shareholder class to riot anytime soon despite the horrific losses they’ve suffered.

  3. uclatrader said:
    August 8th, 2008 at 5:00 pm

    stock mkt is dead, housing mkt is dead, even small business is dead during Olympic game. government won’t allow? think again.

  4. pete said:
    August 8th, 2008 at 7:02 pm

    ive just sent the chinese ministry of treasury an anonymous letter that you are responsible for the market’s decline, as well as the ‘cloud’ cover over the olympics.

  5. speed said:
    August 8th, 2008 at 7:59 pm

    Although I withdrew all my investment from the A-share market long ago, I was still very angry at the 4.5% drop of the index on the very day of the commencement of the Olympic Games. Voting by foot, people were delivering a message.

    There is no substantial protection for individual nvestors and there will be a HUGE supply-demand gap in the coming two years. Without painstaking reform of the system of the stock market, there will be no raging bull.

  6. KC Trader said:
    August 8th, 2008 at 11:40 pm

    Maoxian,

    I know you cannot short in France, can you not short in China either?

  7. Jay said:
    August 9th, 2008 at 12:14 am

    For months my mom keep telling me that bullsh!t that the government won’t allow it going down, I know it is going down for sure (well, let me say 90% sure). The monetary policy is still tight, and the market is at best drawing a line, if not worse. Let’s hope we are seeing the start of the third leg of the bear.

  8. Keith Shepard said:
    August 9th, 2008 at 2:34 am

    “Because shorting stock is not allowed in mainland China, traders have been shorting the Hang Seng aggressively in anticipation of a crash in Shanghai.” — TheStreet.com (06/05/07)

    I remember this post from the Chairman and now I wish I would have bookmarked it:

    Ways To Take a Leveraged Short Position on China (May 19, 2007)

    Hmmmm…

  9. Laswyguy said:
    August 9th, 2008 at 5:12 am

    CM -

    Is there a way you can overly the corresponding p/e levels to your chart?

  10. C. Maoxian said:
    August 9th, 2008 at 8:32 am

    @KC: Right, no shorting allowed… see the link in Keith’s comment above.

    @Lasw: I’m sure there’s a way to do that, but I don’t know how.

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