It may be time to short the Chinese stock market lock stock and barrel if speculation about the size and nature of China’s debt is true. The issue is one poor transparency or outright deception by way of hiding debt or reclassifying debt so that it shows up on a different balance sheet. China has become an industrial powerhouse and borrowed along the way. It has attracted huge amounts of foreign investment. The thinking is that no one wanted to be left out of a huge economic advance in an economy that routinely grew at 10% per year. Now as growth rates fall and projections fall even further it may be time to short the Chinese stock market. Precise timing may depend on technical analysis of stocks that trade as ADRs in the USA. Or one might consider buying options on Chinese stocks that trade in the USA with a majority of these trades being puts.
How Has This Come About?
Short the Chinese stock market? Isn’t this the country that grows at ten percent per year and that will overtake the US economy in a couple of decades? Here is a little background info to help give you a basis when you decide to trade Chinese stocks and especially if you decide to short the Chinese stock market. Despite the amount of investment in China fundamental analysis is difficult when large amounts of debt are hidden from the investor. What concerns many is that China often takes government debt off the books. When the Asian currency crisis hit in the late 1990’s Indonesia, Korea, and Thailand were in trouble. China avoided the worst but still found that its banks had written a huge number of loans that became uncollectable when foreign investment faltered with the currency crisis. What China did was to create “management companies” for its four major banks. These companies took over the debt from non-performing loans and issued bonds for these assets. The bonds were for ten years and the problem was swept under the rug. This may have caught up with China as it has pursued rapid growth to maintain political support for the ruling Communist Class.
2. It may be time to short the Chinese
stock market lock stock and barrel
if speculation about the size and
nature of China’s debt is true.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
3. The issue is one poor transparency
or outright deception by way of
hiding debt or reclassifying debt so
that it shows up on a different
balance sheet.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
4. China has become an industrial
powerhouse and borrowed along
the way. It has attracted huge
amounts of foreign investment.
The thinking is that no one wanted
to be left out of a huge economic
advance in an economy that
routinely grew at 10% per year.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
5. Now as growth rates fall and
projections fall even further it may
be time to short the Chinese stock
market.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
6. Precise timing may depend on
technical analysis of stocks that
trade as ADRs in the USA. Or one
might consider buying options on
Chinese stocks that trade in the
USA with a majority of these trades
being puts.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
7. How Has This Come About?
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
8. Short the Chinese stock market? Isn’t
this the country that grows at ten
percent per year and that will overtake
the US economy in a couple of
decades? Here is a little background
info to help give you a basis when you
decide to trade Chinese stocks and
especially if you decide to short the
Chinese stock market.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
9. Despite the amount of investment
in China fundamental analysis is
difficult when large amounts of
debt are hidden from the investor.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
10. What concerns many is that China
often takes government debt off
the books. When the Asian
currency crisis hit in the late 1990’s
Indonesia, Korea, and Thailand
were in trouble.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
11. China avoided the worst but still
found that its banks had written a
huge number of loans that became
uncollectable when foreign
investment faltered with the
currency crisis.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
12. What China did was to create
“management companies” for its
four major banks. These companies
took over the debt from non-
performing loans and issued bonds
for these assets.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
13. The bonds were for ten years and
the problem was swept under the
rug. This may have caught up with
China as it has pursued rapid
growth to maintain political
support for the ruling Communist
Class.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
14. One Family, One Child and an
Aging Population
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
15. China has had and enforced a one
couple one child rule for decades.
This policy has slowed growth in
the world’s most populous nation
to where India recently passed
China as the nation with the most
people.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
16. This policy has also resulted in the
aging of China’s population. The
traditional means of supporting
the old in China is gone with its
large families. Although the
Chinese are big savers the
government has no retirement
programs and no health insurance
programs for the elderly.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
17. Old age costs will come out of
savings. The high savings rate in
China will not come to the
government’s rescue in a time of
high national debt. It will go to
caring for the elderly.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
18. When this view of things sinks in it
will likely result in a less positive
view of investing in China. And,
when China no longer has access
for foreign investment and needs
to draw down on its foreign
currency reserves it will affect
stock prices.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
19. Profitable trading requires that one
see the future and prepare to short
the Chinese stock market.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
20. When to Short the Chinese
Stock Market
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
21. When to short stocks is when they
are riding high and before
everyone else heads for the exit.
China may well be a good
investment in the long term. But
there is potential for healthy
profits if you choose to short the
Chinese stock market in the near
term.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
22. Trading exchange traded funds
that focus on Chinese stocks may
be a good way to approach this
issue. When to short the Chinese
stock market is probably now. As
always do your own fundamental
and technical analysis before
trading any stock.
By: http://profitabletradingtips.com/profitable-trading-tips/short-the-chinese-
stock-market
