Bloomberg: U.S. Dot-Com Bubble Was Nothing Compared to Today’s China Prices

Bloomberg - U.S. Dot-Com Bubble Was Nothing Compared to Today’s China Prices http://bloom.bg/1CRmFSh

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When you have such misleading titles of doom and gloom, you know the end is NOT near. The article is actually refering to China tech shares not China market.

I have been through CLOB and dot com. I know what's a bubble without defining it to the 4th decimal point. China stock market is no bubble as of now, whereas Australia property bubble should be cracking soon just as Singapore and China did. Besides HK I think so far Asian countries have done well taming the property market, Australia has tamed it better than I thought but it will have to come down rather than "rise slower".

This year could easily be China stock market's year

^^^ The only thing rising faster than A shares market is specuvestor's reputation points..hahaha...

Market madness moves to Hong Kong
Lisa Murray AFR correspondent
668 words
11 Apr 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Chinese savers have rediscovered the sharemarket.

Until this week, it was the Shanghai Stock Exchange which benefited from the new army of Chinese traders piling into equities, making it the best performing market in the world. Now Hong Kong is feeling the effects, and the Hang Seng Index surged to a seven-year high this week on record turnover.

Some are describing it as the start of a "great wall of money" from China, as mainland investors, worried about a sluggish property market and slowing economy at home, look for somewhere else to put their cash.

The five-month-old Shanghai-Hong Kong Stock Connect has provided them with a very attractive alternative. The trading link allows investors on mainland China, for the first time, to trade Hong Kong-listed stocks via the Shanghai exchange.

Retail investors must have over half a million yuan (about $105,000) to take part. But late last month, Beijing expanded the scheme, allowing China's mutual funds to invest in Hong Kong stocks via the link too.

The decision appears to have injected new life into the scheme, which had a relatively slow start and is tightly controlled by Beijing through daily quotas and trading restrictions. Those controls are now being tested. On Wednesday Chinese investors for the first time used up their 10.5 billion yuan ($2.2 billion) quota for trading Hong Kong stocks.

The Hang Seng surged to its highest level since 2008 and $HK265 billion ($44 billion) worth of shares changed hands, almost four times the daily average last year. On Thursday trading volumes were even higher. On Friday afternoon the index rose 22 points to 26,967.

"It's a big surge in the amount of capital going to Hong Kong," said Zhang Qi, an analyst at Haitong Securities.

Part of the reason Hong Kong has become popular with mainland investors is that dual-listed stocks are nearly 30 per cent more expensive in Shanghai, thanks to its market rally over the past 18 months, according to Mr Qi.

"Investors are trying to find undervalued shares and when they look at Hong Kong, it's quite cheap," he said.

The frenzy is unlikely to slow. There is speculation the quotas for the "stock connect" program will be increased and some smaller retail traders are hoping the threshold for eligibility to invest could be lowered.

At the same time, the government has flagged setting up a similar trading link between the Shenzhen stock market and Hong Kong.

For each of the past three weeks, more than 1 million new trading accounts were opened on the mainland, which is close to a record level.

Among the newly enthused traders is Ms Yan, a 59-year-old retiree from Shanghai. She was burnt during a sharemarket plunge in 2008, which happened after two years of soaring prices and slashed the value of her 600,000 yuan equity holdings by half.

Ms Yan, who used to work at a pharmaceutical company, stopped trading. But in early March, she withdrew her 2 million yuan savings from the bank and invested it in the sharemarket.

"We are seeing a portfolio rebalancing toward shares," said Westpac senior international economist Huw McKay, who believes the rally on Shanghai's market has some way to go.

"At the end of 2007, households owned half of outstanding shares and now they own 20 per cent. So there has been a major pull-back on their exposure to equities."

While that is unlikely to go back to 50 per cent, Mr McKay believes it could settle "somewhere between 30 and 35 per cent".

He said price-earnings multiples - a measure of the value of stocks - on the Shanghai market are still well below their long-term average.

WITH LUCY GAO

Key pointsWith Shanghai share prices stratospheric and property plummeting, Chinese investors are pouring money into the Hong Kong market.

Hang Seng is at a 7-year high.


Fairfax Media Management Pty Limited

Document AFNR000020150410eb4b0001n

China Enters Stock Frenzy as Rookie Traders Open Record Accounts

What's happening to Japan in late 80's is happening to China now. History repeating itself.

(08-04-2015, 10:07 AM)specuvestor Wrote: When you have such misleading titles of doom and gloom, you know the end is NOT near. The article is actually refering to China tech shares not China market.

I have been through CLOB and dot com. I know what's a bubble without defining it to the 4th decimal point. China stock market is no bubble as of now, whereas Australia property bubble should be cracking soon just as Singapore and China did. Besides HK I think so far Asian countries have done well taming the property market, Australia has tamed it better than I thought but it will have to come down rather than "rise slower".

This year could easily be China stock market's year

When colleagues are lamenting that their MILs who are staying at home and tasked to look after their young kids, are making a killing in the market and earning 'more than they do in the office', i wonder whether it is a statement of intent or simply a showcase of madness.

These are early signs for sure. In China, anything can cook up pretty easily. I reckon a bubble is forming nicely.

(14-04-2015, 06:40 AM)weijian Wrote:

(08-04-2015, 10:07 AM)specuvestor Wrote: When you have such misleading titles of doom and gloom, you know the end is NOT near. The article is actually refering to China tech shares not China market.

I have been through CLOB and dot com. I know what's a bubble without defining it to the 4th decimal point. China stock market is no bubble as of now, whereas Australia property bubble should be cracking soon just as Singapore and China did. Besides HK I think so far Asian countries have done well taming the property market, Australia has tamed it better than I thought but it will have to come down rather than "rise slower".

This year could easily be China stock market's year

When colleagues are lamenting that their MILs who are staying at home and tasked to look after their young kids, are making a killing in the market and earning 'more than they do in the office', i wonder whether it is a statement of intent or simply a showcase of madness.

These are early signs for sure. In China, anything can cook up pretty easily. I reckon a bubble is forming nicely.

I think this is only the beginning as the Chinese Government achieves a few objectives through a vibrant stock market. They are encouraging more vibrancy as can been seen through recent allowing of more trading accounts per person.

They have done the Shanghai-HK exchange link, and soon will be replicating it to the Shenzheng-HK, and perhaps to more cities once the first is seen to be successful. The next step could be a link with another country (Singapore?)

This ultimately leads to a free-flow of the RMB, thereby achieving an objective of internationalising the RMB. And we have the “一带一路”， and the Asian Infrastructure Investment Bank too.

Yes, this year will be China's.

To be precise: China policy makers are not concerned about the stock markets. They are only concern if the local masses are affected. That is why they clamped down on the A-share leverage and margins few months back and not let it overblown. That's why they are not the same as other stock market bubbles where the dogma is to let "invisible hand" takes its course. I reckon some policies to that effect will be happening in HKSE.

The through train is not to excite the market. It is for internationalisation of RMB via gradual opening of Capital account. We have to know which is the horse and which is the cart. China A and H shares have room to run, but government don't want a bubble, so they will intervene. Execution will be key for investors because the big big picture is very clear.

But the stock markets are reflective of good policy making. Look at Indonesia as a case study when SBY just came on board, declining for first 2 years before roaring.

Actually when the world switch to Fiat money creation. It has meant to create a massive bubble and destabilise the purpose of capitalism. Credit has become the new asset in modern world as all inflation are brought by massive credit creation which is not backed sufficiently by real assets. It's all imaginary now and when credit stops the bubble shall burst. When credit flows back the bubble boom will form again.

Shenzhen’s overshadowed stocks surge
CHAO DENG AND WAYNE MA THE WALL STREET JOURNAL APRIL 14, 2015 7:46AM

Housed in a skyscraper with a 50-metre tall statue of a bull’s head out front is the world’s best-performing stock market this year, a $US3 trillion ($3.9 trillion) exchange that is little known outside China.

Shares on the Shenzhen Stock Exchange, one of the largest globally, have surged 55 per cent this year, boosted by droves of small-scale investors furiously trading China’s hottest young companies.

These businesses are seen as China’s future, especially compared with the debt-laden state-owned giants that trade in the larger Shanghai market, where stocks are up 27 per cent.

Only a few designated foreign fund managers can buy in Shenzhen, but that is expected to change this year, when the exchange links up trading with Hong Kong, across the border. In November, a program called the Shanghai-Hong Kong Stock Connect began operations, letting all types of overseas investors buy shares in Shanghai and people on the mainland buy Hong Kong stocks.

The Shenzhen program is expected to be similar to the Shanghai arrangement, which helped shares there to rally last year, and sent a flood of money into Hong Kong last week.

For now, the Shenzhen market is driven by fast-trading mum-and-dad investors, who often buy and sell based on what they read in state-owned media, or hear from friends. Some simply jump into stocks that are already going up. Institutional investors, using the advice of professional stock analysts, are the minority, and market participants say insider trading is still problematic.

“I’m just dabbling. If all your friends are buying stocks and talking about it, and you don’t buy, then you have nothing to talk to them about,” said 32-year old Liu Wei, who works in real-estate management in Shenzhen.

He had been waiting in line for an hour to start a trading account at a branch of China Merchants Securities one April morning and planned to invest a few thousand yuan, equivalent to several hundred dollars.

“We prefer to invest in the Shenzhen market [over Shanghai] because we have our own network here and can get [better] information in industries like hotel, mining, real estate and internet,” he said.

In 2013, underscoring Shenzhen’s ambitions, the exchange moved into a massive 46-storey building, designed by Dutch architect Rem Koolhaas, with no fewer than three bull sculptures outside. It is a few kilometres from the old headquarters, where investors rioted in 1992 because they thought a lottery program offering applications to buy shares was rigged.

Both of China’s stock markets opened in 1990 as an experiment by the Chinese government. Shenzhen, a former fishing village that is now one of China’s most modern cities, is considered the birthplace of the country’s economic reforms three decades ago.

A woman named Ms Yu, who only gave her last name, said she had 1 million yuan (roughly $US160,000) in stocks. Like Mr Wei, she takes investing advice from friends. “Their recommendations have been good,” she said, allowing her to reap gains of 20 per cent to 30 per cent.

She said that the market goes through cycles, and investors alternate between exuberance when the market is in an upswing and more sober trading in normal periods. In 2007, the market fell 67 per cent from its peak, only recovering those losses this February.

Shenzhen’s rally has gone far. On ChiNext, the most recently established of the exchange’s three trading boards, shares are up 73 per cent this year, and have been trading at their most expensive levels yet relative to earnings. The market is sometimes seen as China’s version of the Nasdaq Stock Market because it attracts technology start-ups.

One of the costliest stocks on ChiNext, Hithink Flush Information Network, an online financial-software company, is up more than 10-fold since last April and trades at hundreds of times its earnings.

On Shenzhen’s board for small and medium enterprises, also set up after the main board, is Cloud Live Technology Group, a former restaurant chain that transformed itself into a cloud-computing business when China’s corruption crackdown blocked bureaucrats from spending on its high-end Hunan cuisine. Last week, Cloud Live became the first company to default on the principal of its onshore debt.

For stock investors, the news didn’t seem to matter. Shares rose on the day of the default and are up 43 per cent this year.

The problem with some of China’s smaller firms is that “one day they are a steel mill and the next day they want to be an internet company,” says Peng Yao, who runs a China fund for BNP Paribas Investment Management. Mr Yao says the firm has been scrutinising valuations more closely and is reluctant to chase after the rally in start-up stocks this year.

The founders of these businesses “believe in themselves and their stories,” Mr Yao says. “That energy or passion is contagious to investors.”

Firms traded in Shenzhen range from software developers, pharmaceutical businesses, makers of parts for electronics and other technology names, to a bevy of consumer companies, from fashion and textiles to food and beverages. Beijing has been pushing businesses like these, hoping they can shoulder the role of powering the economy that long has fallen to lumbering, state-owned companies in heavy industry.

Last month, Premier Li Keqiang said China planned to open a link between the Hong Kong and Shenzhen exchanges. Although the launch date hasn’t been announced, market participants expect the hook-up to give the world better access to the most vibrant part of China’s economy.

“We are actually thinking about adding more [in Shenzhen] because of the expectation of a Shenzhen stock connect” says Anthony Wong, portfolio manager at Allianz Global Investors, a unit of Germany’s Allianz, which currently has a special quota for professional money managers that lets it invest a small amount on the mainland.

“We don’t want to be too early,” given uncertainty over the launch date, he says.

Mr Wong says that investors needed to be careful because the Shenzhen market was under-researched compared with the Shanghai exchange.

The Shenzhen market ranks fourth in Asia in capitalisation after exchanges in Tokyo, Shanghai and Hong Kong, and eighth in the world, according to February data from the World Federation of Exchanges.

It has outperformed Shanghai, up 28 per cent in the five years through to Friday, with a gain of 71 per cent, although it has lagged behind the S&P 500, which had risen 76 per cent.

This year, the Shenzhen A shares index is performing better than the Shanghai market benchmark, after lagging behind it in 2014 with a 34 per cent gain. Shanghai surged 53 per cent.

Chinese investors have moved back into stocks because banks pay low rates on deposits and the property market has stumbled.

“We’re doing it because it’s better than saving money in the bank,” said Ms Li, a potential investor who only gave her last name. “I don’t know what stocks to pick. My friends just recommend them.”