Shanghai – 10% down from the peak

12 Aug

Shanghai is down 10% from its high on the 4th August, as the commerce ministry commented that the Government’s CNY4tr stimulus package is probably not big enough to offset decreases in exports.

Why?
1. July export figures were 23% down yoy
2. New loans (CNY355.9bn) were a quarter of those lent in June.
3. The president of China Construction Bank Corp (Zhang Jianguo), the world’s second most valuable bank, said that the firm will cut new loans by 70% to avoid taking on bad debts.

Below I highlight some of today’s losses:
1. PetroChina (the worlds largest company): -5%
2. China Cosco Holdings (the worlds largest dry bulk shipping operator): -6.5%
3. Jiangxi Copper (China’s largest metal producer): -7.4%

It is interesting to note that exuberance for Chinese stocks has been so dramatic, that last week alone 660,000 individual trading accounts were opened.  This coincided with the end of a period in which IPOs were banned.

Look at the graph below of the Shanghai index – the drop off at the end is eerie.

sg2009081258579

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