June 6, 2007
Super Bubble Intact
Interesting bit from a Credit Suisse note this morning:
“… the top 100 stocks (based on market cap as at 4 June 2007) accounted for 66% of total market cap, 41% of free-float market cap and 82% of 2006 aggregate profits of all A shares. On a simple average basis, these 100 stocks dropped only 5.5% between 21 May 2007 to 4 June 2007, while the simple average of decline for all stocks during this 2-week period is 14.9%, i.e., the bigger and better companies are outperforming.”
If you’re not familiar with Credit Suisse’s “super bubble” thesis, they believe that the A share market in China is repeating the super bubble seen in Taiwan and Japan in the 1980’s for four reasons:
1) excess liquidity; [demand]
2) free-float in the A-share market is too low; [supply]
3) RMB expected to appreciate; [demand] and
4) a prolonged period of high growth with low inflation [demand]
The fifth reason they forget to mention is:
5) my manicurist can’t get enough of this market!
Very Zen-like as if to embody the full spirit of a Daoist blogger…
June 6th, 2007 at 12:05 pm
CM,
do you dig in the dirt everyday? bite your nails? a metrosexual thing? all of the above?
June 6th, 2007 at 1:29 pm
When your the chairman, you can do whatever you want. Like all bubbles, they do eventually pop.
June 6th, 2007 at 2:46 pm
Babak: What are you talking about? Oh, the manicure. Yes, taking after Tony Soprano, I get my nails done every once in awhile. The only dirt I dig through is in Chinese financial statements, I never bite my nails, and a man with as hairy a back as mine would never be accused of being a “metrosexual.”
June 7th, 2007 at 1:07 am
CM are we talking Top100 Chinese stocks or US? Is MC more fitting?
June 7th, 2007 at 8:09 am
CL: Chinese A Shares. Is Market Cap more fitting for what?
June 7th, 2007 at 9:02 am
[...] World China Fund – TCWAX Print This Post digg_url = ‘http://www.neuralmarkettrends.com/2007/06/06/templeton-world-china-fund-tcwax/’; digg_title = ‘Templeton World China Fund – TCWAX’; digg_bodytext = ‘Anything associated with China these days is screaming into the stratosphere and the Templeton World China Fund (TCWAX) mutual fund is no different. All good trends must end one day and what we’re seeing could be a repeat of the Taiwanese/Japanese bubble of the 80’s. Too bad Morningstar rates this fund as 2 out of [...]‘; ( function() { var ds=typeof digg_skin==’string’?digg_skin:”; var h=80; var w=52; if(ds==’compact’) { h=18; w=120; } var u=typeof digg_url==’string’?digg_url:(typeof DIGG_URL==’string’?DIGG_URL:window.location.href); document.write(“”); } )() Anything associated with China these days is screaming into the stratosphere and the Templeton World China Fund (TCWAX) mutual fund is no different. All good trends must end one day and what we’re seeing could be a repeat of the Taiwanese/Japanese bubble of the 80’s. [...]