Despair, in short, seeks its own environment as surely as water finds its own level.
A. Alvarez
Lately one naysayer after another, some of which actually like to call themselves experts are all marching to the same drumbeat. The Chinese economy is trouble and that the Chinese markets are going to continue crashing. Granted the Shanghai index experienced a breathtaking advance over a rather short period of time and so it should not have come as a surprise to anyone that the market was definitely going to pull back. The higher the run, the stronger the pullback. However, we feel that the Doctors of gloom and doom are over doing it and this is what we had to say on this subject recently.
Not much to add here, except that it followed the project path. The fear has not peaked yet, so that means more downside is to be expected. It traded below 3000, and as long as it does not close below 3200 on a monthly basis, the bottoming action will gain traction. As it has already traded below 3000 and fear levels have not hit the extreme ranges yet, a monthly close below 3200 will drive this below 2800. If the Chinese economy is dead, then there are no words to describe our economy. Our economy is based on smoke and mirrors. Alchemists are trying to create something from nothing, and so far the cocaine sniffing crowd is buying this. Market update Sept 1st, 2015
Stephen Roach the former manager of Morgan Stanley Asia made the following comments on CNBC towards the end of July. .
“Markets around the world are really rich. I think if the Chinese market corrects a little bit more from here then it would be my first choice,” Roach, who is now a senior fellow at Yale University’s Jackson Institute of Global Affairs, told CNBC on Friday.
Despite the strong correction, his overall view seems to be that China still makes for a good long-term investment, based on his September 3, 2015, statement.
Growth in China has slowed, “but it’s not going in for a crash…and that will present, I think, an opportunity for shares to re-evaluate the China threat, big time.”
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