GI_Joe
10-07

Due to FOMO, Chinese and HK stocks skyrocketed to 4 years high. This is primarily due to Chinese government policies. This is unseen for years. The last time Chinese stocks crashed was in 2015-2016. Lousy stocks all up without any change in fundamentals. This is not investment but speculation. Do not be the last guy holding the babies.

Many investors who bought in 2021 were stuck because of the rise in geopolitical tension between the West and China, coupled with a sluggish economy. After so long, many of these investors can finally offload them. This is definitely a great news to them.

For new investors who are buying into this so called bull run have to be very cautious. Do not make the same mistake as those guys in 2021.

The stimulus packages must cause real impact to the economy, and not hearsay. China is facing structural problems now. First problem to solve is high unemployment rate especially in the young population. Many university fresh graduates are not able to find jobs. Even those could find jobs are lowly paid because the employers have no incentives to offer high salaries because it is the employers market now. Without jobs, how can one be able to sustain consumption, let alone buying big ticket items like housing and cars. Yes, the government cut interest rates to attract buyers to buy cars and houses. The question is how are borrowers able yo service the loans not matter how low is theinterest rate. Borrowing future monies that may be unable to pay back in the long term will damage the system.

Secondly, rising geopolitical tension between China and the West will dampen demand in Chinese goods. Do not forget that heavy traffs is coming no matter who won the US presidential election in Nov. Partisan in US politics is all against China now. 

Thirdly, the oversupply housing issue in China.It has not totally resolved despite the cut in interest rates for home buyers.

In conclusion, to see whether the rally is real or or not, watch out for numbers in the next quarter, or at least monthly. If the stimulus is notfelt at all, this is just a speculative rally. The bubble will burst, just matter of time.

Good luck to all traders and investors.

Modified in.10-11
Policy Falls Short? Is China Stocks Bull Market Over?
The 12th session of the Standing Committee of the 14th National People's Congress announced debt-reduction measure: raising the debt ceiling for local governments by 6 trillion yuan. It is lower than the rumored $10 trln stimulus policies. ------------------ Is the bull market over or not? How do you view the policies?
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Comments

  • KJ11
    10-07
    KJ11
    during covid when the world is in lock down, US stocks went up as well, what was the fundamental back then? bad news is now good news lol
    • KJ11ReplyGI_Joe: 
      yes, I'll recommend to just buy the index ETF - HSTech, CSI300 or A50.

      Position sizing will be critical, buy in layers or do DCA.

    • GI_Joe: 
      Yes, many US stocks rallied during that Covid period, with many of them without fundamentals. When the fever finally sibsized, many of them collapsed, with some even filed for chapter 11.
    • GI_Joe: 
      In this current Chinese stocks rally, only buy those with strong fundamentals. The Chinese markets are dominated 80% by retail investors, so it is good new for foreign investors. When the bubble burst eventually, the Chinese government will save the markets because of the social implications.
    • GI_Joe: 
      Yes, many US stocks rallied without fundamentals to all time high during that Covid period. But after the fever has subsized, many US stocks collapsed. Some even bankcrupted. In this current rally in Chinese stocks, only buy those with strong fundamentals. Many people just followed blindly and whacked any stocks. Remember, Chinese markets are dominated 80% by retail investors. Many of them will just whacked. This is good news for foreign investors.
  • KJ11
    10-07
    KJ11
    stimulus is forward looking, stocks are forward looking, data is backward looking.
    • GI_Joe: 
      Yes, injecting liquidity is forward looking but the effectiveness will be seen in the next quarter. The effectiveness is below expectations , be prepared for sell off.
  • GI_Joe
    10-08
    GI_Joe

    You guys should read up on the meltdown of the Chinese markets in 2015-2016. Will history repeat itself? Only indicators will tell. The Chinese economy is facing structure problems.

  • GI_Joe
    10-07
    GI_Joe
    Almost all the tocks up more than 100%. It has created wealth effect to the mainland and HK investors. Demand for big ticket items will go up. Restaurants packed.
  • GI_Joe
    10-07
    GI_Joe
    What we see now is very much speculation due to large amount liquidity injected into the markets. There are no changes to the fundamentals of the companies. Until we see a real positive impact to the companies, this rally will fade eventually. I will sell into strength. For traders, follow the monetum. Most of them don’t take overnight positions. Good for trading profits.
  • KJ11
    10-07
    KJ11
    US launched QE1, QE2, QE3 and QE4 as well.

    CN government have signaled willingness to step up the stimulus package if necessary.

    What is good is governments are introducing the stimulus in layers then measure the results as feedback, fine tune and launch more if necessary.

    If they have gone nuclear since day 1, they could have overheated the market and create new problems while trying to solve the current.

    I think it's the same when u go see doctor, they give something light 1st, if it doesn't works, then they will prescribe you something stronger hehe

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