Back in February, I posted that I didn't know where the Shanghai stock market was going to go. It had risen 130% over the previous year and was acting highly volatile. I noted that P/E ratios were totally out of whack and that the inability to short stocks and the lack of investment opportunities for domestic investors was pushing prices higher. I did not ever think there was so much more room for it to run. Since that day, the Shanghai composite index has risen another 60% from ~2700 to 4300. The market is down again today by 6% after an 8% drop yesterday. Yet this just puts the index back at the point is was at just 2 weeks ago. This bubble is bound to burst, or at least deflate. The question is only how much bigger can it get and can you get out before it does pop?
Tuesday, June 5, 2007
Shanghai stock market roller coaster
Posted by MCC at 2:23 PM