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Will Chinese Shanghai stock market’s 9% drop drag Wall Street and other great stock exchanges to heavy loss? Is it time to buy China stocks? February 27, 2007

Posted by deminvest in China stock, etf, growth stock, investment, stocks.

Will Chinese Shanghai stock market’s 9% drop drag Wall Street and other great stock exchanges to heavy loss? Is it time to buy China stocks?

In my opinion: “no!” to first question “yes but not for me!” to second question

for several reasons:

1) Shanghai is not the main Chinese stock market. Hong Kong is the big one and it only went down 1.8%.

2) Shanghai went down without any recognizable reason. Just a little panic of a market which doubled in a short time.

3) US stock markets are more than 30 times larger than Chinese markets.

In my opinion Shanghai will follow Wall Street and not the opposite. If I was a trader, I’d buy Chinese Index ETF today and sell it tomorrow. Fortunately today I know my limits, and will not try a speculation that may cost me dearly.


1. retirein - February 27, 2007

I don’t think the Chinese stock market is the only thing going wrong
right now.

2. Daniel - February 27, 2007

Whoops, looks you really screwed up there. Hope you didn’t fool too many traders..

10 years ago, a 9% decline in Chinese markets would mean nothing. The times are a-changing. China is now a huge player in the global market, and they will soon overtake the US as world superpower, unfortunately.

3. Linas - February 27, 2007

In fact, Chinese stocks went down 9%. It’s a huge drop, and obviously any and all stock exchanges will follow. Since globalization came into effect, everything is connected, and inter-connected.

Of course, any smart individual would buy up as much as possible with extra cash, of companies that took the biggest hits, even though they shouldn’t have. PTR is at the top of my list.

Since the drop came from a scare that was never going to happen, and still isn’t going to happen, it provides one of the best opporutinities for investors. Stocks will bounce back in a short period of time, especially on any other market but Chinese; which means everything will go up…

4. deminvest - February 28, 2007

Daniel, I know how inportant China is, but still Shanghai is small compared to Hong Kong which is China’s main stock market. Moreover tonight the Shanghai Composite Index rebounded 3.9 percent, recovering part of Tusday’s its 8.8 percent plunge.

I am not selling. The opposite. Tomorrow I will buy (Will put my March $1000 in this roulette!). I am still positive, because I don’t see any economic data about China or the US which justifies a selloff.

5. deminvest - February 28, 2007

Linas, I am glad you agree with me. Tomorrow I’ll have some cash on budget to buy, and I will. (unfortunately my optimistic $1000 of tomorrow will not chache very much on World stock markets sentiment 🙂 )

6. deminvest - February 28, 2007

retirein what else is going wrong in your opinion?

(except of course of the fact that we are poor – and a bit poorer today – and others are rich… – but a bit less rich today – )

7. retirein - February 28, 2007

Housing crash leaking into other parts of the economy. Troubling
inflation mixed with slowing economic growth (see latest numbers for
durable goods orders). Markets overbought by euphoric speculators. How
much further is the fall going to go? That’s what I want to know,
because I am getting absolutely hammered today. Somebody say something optimistic. I need it, brothers and sisters!

8. len - February 28, 2007

some economic analysts would say, it is time to buy as the next few months the falls in trading is still on but the market confidence will soon pick up as the tumble is not too deep.. so good luck to the optimistic groups!

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