the great chinese crash of 2008

  1. 298 Posts.

    $1 trillion debt to be sucked out of the system only a fifth ($200 billion) writen down so far.

    $800 billion to go.

    the NASDAQ lost almost 80% of its value in 2001 in the tech crash
    Apparently the Shanghai composite is down 44%.

    At least another 40% to go

    Watch it carefully. I anticipate a big crash post Beijing

    that will be when the ASX will capitulate completely

    the DOW is down 256 and there is a special meeting of some sort of world leaders to fix things

    things have just started to get interesting


    The Great Chinese Crash of 2008
    By Todd Wenning April 7, 2008


    Have you heard a lot about Chinese stocks lately? Neither have I.

    That's probably because the Chinese stock markets are experiencing a nosedive not unlike the Nasdaq plunge of 2000. Since their October highs, the Shanghai Composite (SSE) is down 44%, and the Hang Seng is down 24%. I guess our financial media is too concerned about the S&P's 13% decline to care.

    I mean, just take a look at some of the significant drops of Chinese American depositary receipts over the past six months:

    Company
    % Change, 10/31/07 to 3/31/08

    LDK Solar (NYSE: LDK)
    (32%)

    Baidu.com (Nasdaq: BIDU)
    (37%)

    Origin Agritech (Nasdaq: SEED)
    (42%)

    Suntech Power (NYSE: STP)
    (31%)

    Qiao Xing Universal Telephone (Nasdaq: XING)
    (49%)

    *Source: Capital IQ.
    Rewind a few years to 2000, when the Nasdaq lost 38% of its value -- with names like Amazon.com (Nasdaq: AMZN) and Akamai Technologies (Nasdaq: AKAM) losing more than 80% in that year alone. But as we recall, that wasn't the end of it -- the Nasdaq 100 would go on to lose an additional 58% through the end of 2002.

    Oh no, not again ...
    Chinese stocks were getting a bit frothy, and were due for a correction like this -- the SSE did, after all, quadruple in value from October 2002 to October 2007. Taken together with a new strain of irrational exuberance infecting first-time investors in China, it meant that you had all the makings of a bubble in need of popping.

    All it took was a Chinese version of the credit squeeze to start the sell-off. The reduction of available credit made it harder for growing companies to use leverage to expand their businesses, which called into question the lofty valuations given to high-growth Chinese companies.

    But unlike many of the Nasdaq stocks that faltered in 2000, a good number of Chinese stocks have posted not only positive earnings, but strong earnings growth, too.

    Baidu.com, for instance, beat the Street's latest quarterly earnings estimate in February by 20%, growing earnings by 79%. Apparently 79% profit growth wasn't enough to satisfy investors -- Baidu.com shares remain 44% off their 52-week highs.

 
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