Aug 31, 2009

China Stock Market Limit Down

China Stock Market Limit Down

China’s stock market today plunged on concern of tightening liquidity, the Benchmark Index of the Shanghai Stock Exchange Composite Index fell by 6.745 % to 2667.74 which is down more than 22% from Aug 09.

The CSI 300 is a broad based index of the Shanghai and Shenzhen Stock Exchange slump by 7.106% to 2830.27.

The concern here is that more than 150 stocks of the 898 companies component of the Benchmark Index hit limit down which is cap at 10% daily, and includes stocks like China Petroleum, Industrial Bank, China Shipping, Aluminum Corp of China, Jiangxi Copper Co, Northeast Securities Co, Sinolink Securities, Wuhan Iron and Steel and more. The China market has been highly unstable this past month of August and has drop by more than 22% just within the month.

I have for a long time been very nervous about the China market and very uncomfortable with the bubble being created through a high lending policy which does not seem sustainable in the long term and all the liquidity made its way into the stock market making it highly speculative like a casino.

Is another financial crisis looming in the near horizon not forgetting that we are now in the 12 year cycle from the last Asia Financial Crisis of 1997? Yes just for discussion the Malaysian recession seems to always fall in the year of the Cow. (Oops! Yeah and coincidentally some ass just showcased the decapitated head of the cow all over the local media and could this be an omen of things to come? Hmm.. Not a very nice thing to do as a Malaysian and well, lets wait and see.) Yeah somehow the Malaysian recession always falls in the year of the Cow or just about as in the recession of 1973, 1985, 1997 and 2009 and in full recovery in the year of the Dragon. (We will cover this another time otherwise we will deviate too far off.)

So! Is another financial crisis looming? Can this happen again? And what will be the effect in Asia and for us here in Malaysia? Can our stumbling government able to handle another crisis if it happen?

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