8 Jan 2016

China Rocks Markets

Last April, I wrote that the Chinese stock market was red hot and that I didn’t watch China closely enough to say whether it was in a bubble, but it was an expensive market (click here for the article). By the end of summer, it was pretty clear that there was a bubble and that it was bursting (click here for the article), as we can see in the chart… Read More

By Tags:
12 Aug 2015

The Chinese are Nervous

Although China has been liberalizing in recent years, one of the most centrally planned aspects of their economy is the value of the currency. Yesterday, the People’s Bank of China (PBoC), their central bank, lowered the value of their currency against the US dollar by almost two percent, the largest one-day move in decades (although as currency devaluations go, this one was small). If you look at the chart below,… Read More

By Tags:
8 Jul 2015

When Bubbles Burst: China Edition

While Greece is getting all of the headlines, the bubble in mainland Chinese stocks that I wrote about in April and June is now bursting (click here or here for refreshers).  The Shenzhen index is down -38.5 percent from its peak on June 12th through yesterday and the Shanghai index is down -27.9 percent over the same time period. The following shows these two indexes in yellow and orange compared to the S&P 500 in blue… Read More

11 Jun 2015

How to Tell Emerging from Developed Markets

Last week, I wrote that the emerging market stock indexes that Vanguard tracks will be adding mainland China A-shares to their index (click here and for a refresher).  On Tuesday, MSCI, the world’s most popular index creator for non-US stock indexes announced they would not be adding Chinese A-shares to their emerging markets indexes. MSCI believes there are too many regulatory issues related to non-Chinese owners that could make owning… Read More

3 Jun 2015

Emerging Powerhouse

When the Communist People’s Republic of China (PRC) took control of China in 1949, all privately owned assets were expropriated by the government and what were once vibrant capital markets went dark until December, 1990 when eight companies started to trade publicly on the Shanghai Stock Exchange. Now, as I wrote in April, the mainland Chinese stock markets are red hot and many people believe they are in the middle of… Read More

23 Apr 2015

China’s Red Hot Market

Last Friday, Chinese regulators said that they were going to make borrowing on margin more difficult for investors in an effort to curb the recent euphoria in Chinese stocks. I have to admit that I didn’t grasp just how hot Chinese markets have been recently, partly because the Chinese stock markets are broken up into multiple segments that are hard to follow and have dramatically different returns.   The Hang… Read More