As China begins to taste the ups & downs in the markets, its appetitive for taking risks and aligning itself with global speculators will only increase in the near future
Snowstorm, subprime-blows and dollar-hurricane,
all seem to be acting in tandem to pull down Shanghai Stock Exchange from maintaining the bull run. The rather laid-back Chinese markets, which had hardly seen much activity during 2000-2005 (the index had stuck to 1,000 mark, despite strong economic fundamentals), had suddenly caught on with the global financial trends in the past two years – registering an all time high of 5,500. But the first month of 2008, caught the bull by the horns, paving way for the bears to pierce the bubble, based on over-valuations and high rate of speculations seen in the Chinese markets. According to experts, the Chinese shares before the current fall was trading at “price-to-earning ratios of 50 and forward ratios of 40.”
Now, the Chinese investor is certainly not very familiar with these bulls & bears parlance. It is only in 1994 that the bourses first opened in the communist mainland and it is for the first time that China is experiencing a market meltdown. “The typical Chinese household still has over 70% of its savings in bank deposits, compared with 30% in Japan, less than 25% in Europe & less than 20% in the US. Even India, whose per-capita income is less than half that of China’s, the average household has only 40% of its savings in banks, the rest in bonds and equities,” says Steven Xu, Chief Representative, China, with the Economist Group. However, despite the melt-down in the markets, “the outlook on the Chinese mainland banking system remains stable rather than positive as continued strong economic growth is counterbalanced by the structural problems faced by the banking sector,” Standard & Poor’s informed B&E.
The million dollar question obviously is, will Chinese Government intervene to boost dwindling morale of its retail investors and ensure that they have full domestic backing for hosting Olympic Games? Apart from maintaining optimum pollution levels, the Chinese Government is already grappling with the snowstorm, the worst in past 50 years.
The stock markets have already made the contingency plans ready to meet the eventuality of worsening weather and eventual power blackouts. It is reported that Shanghai Stock Exchange has a 30-tonne oil store – enough to supply power for one week. China will soon learn to grapple with the busts & boon in the markets. It will have to soon imbibe that it cannot remain de-coupled from the global economy for too long.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Snowstorm, subprime-blows and dollar-hurricane,
all seem to be acting in tandem to pull down Shanghai Stock Exchange from maintaining the bull run. The rather laid-back Chinese markets, which had hardly seen much activity during 2000-2005 (the index had stuck to 1,000 mark, despite strong economic fundamentals), had suddenly caught on with the global financial trends in the past two years – registering an all time high of 5,500. But the first month of 2008, caught the bull by the horns, paving way for the bears to pierce the bubble, based on over-valuations and high rate of speculations seen in the Chinese markets. According to experts, the Chinese shares before the current fall was trading at “price-to-earning ratios of 50 and forward ratios of 40.”Now, the Chinese investor is certainly not very familiar with these bulls & bears parlance. It is only in 1994 that the bourses first opened in the communist mainland and it is for the first time that China is experiencing a market meltdown. “The typical Chinese household still has over 70% of its savings in bank deposits, compared with 30% in Japan, less than 25% in Europe & less than 20% in the US. Even India, whose per-capita income is less than half that of China’s, the average household has only 40% of its savings in banks, the rest in bonds and equities,” says Steven Xu, Chief Representative, China, with the Economist Group. However, despite the melt-down in the markets, “the outlook on the Chinese mainland banking system remains stable rather than positive as continued strong economic growth is counterbalanced by the structural problems faced by the banking sector,” Standard & Poor’s informed B&E.
The million dollar question obviously is, will Chinese Government intervene to boost dwindling morale of its retail investors and ensure that they have full domestic backing for hosting Olympic Games? Apart from maintaining optimum pollution levels, the Chinese Government is already grappling with the snowstorm, the worst in past 50 years.
The stock markets have already made the contingency plans ready to meet the eventuality of worsening weather and eventual power blackouts. It is reported that Shanghai Stock Exchange has a 30-tonne oil store – enough to supply power for one week. China will soon learn to grapple with the busts & boon in the markets. It will have to soon imbibe that it cannot remain de-coupled from the global economy for too long.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
Top Articles on IIPM:-
'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs
No comments:
Post a Comment