Communists propping up the market!

18 Aug

Shanghai (SHCOMP) recovered 1.4% today (to 2910.88) after dropping around 10% from peak, and 5.8% yesterday (NB – worst performance of any country index yesterday).

Well known ex-Morgan Stanley economist Andy Xie believes the index is set for a further 10% drop as banks reign in their lending.

Yunnan Copper halted trading yesterday after falling 10%.  The company reported a loss and said that it “sees no clear signs of recovery”.

I would like to point out that the Communist Party will celebrate 60 years of power this coming October.  The Government is unlikely to want a major slump in markets just before this milestone.  As a result I suspect some mechanism will be found to reduce downward pressure on the Chinese stock market. Perhaps once Xie’s fears pan out over the coming days it will be a good time to long the market before the celebrations commence.

Without a brokerage account (normally with high fees), China is not always an easy market to enter.  Here are a couple of more accessible instruments that provide exposure:

China Tracker HKG 2801
MUTF_CN:040002
INDEXAMEX:CZH.X

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