One of the topics I constantly wrote about come 2008 was the Chinese stock market and the high price levels it had attained.
High inflation and interest levels combined with a less than perfect stock market (mildly put) brought me, as it did many others, to believe the 2008 will prove to be a turning point for the Chinese market.
High hopes were placed on the Olympics to stabilize the system but as every novice game theorist knows when a premise like that is common knowledge than each individual always has a dominant strategy to go and sell a bit early to avoid the mass sales to follow. I’m guessing that’s what’s happing, amongst other things.
Meanwhile, the Chinese stock market plunged by approximately 45% compared to October 2007’s record (Chinese CSI 300 chart by Bloomberg.com):
I wrote before, and I think it is still obvious, the Chinese market has every reason to become a great invest in the long term. But what we’ve seen so far has been a serious overshooting in stock prices compared to potential growth.
Related Posts:
1. The Financials of 2008 – What Will We Talk About?
2. 5 Spontaneous observations on what's going on
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