Friday, June 26, 2015

Chinese Stock Market DIves; Morgan Stanley Warns

The Shanghai Composite fell 7.4%, wiping hundreds of billions of dollars off the total market capitalisation of the index. The market has now reversed 18.8 per cent from its June 12 high.

Last week Friday, it fell 6.5%.

The tech-heavy Shenzhen market dropped 7.9 per cent while the small-cap board, ChiNext, tumbled 8.9 per cent.

“Our stance on China A shares is that this is probably not a dip to buy. In fact, we think the balance of probabilities is that the top for the cycle on Shanghai, Shenzhen and ChiNext has now taken place,” Morgan Stanley said in a report published today.

Analysts at BlackRock Inc., Credit Suisse Group AG and Bank of America Corp. are all calling the Chinese stock market a bubble.

I have long expected a great crash of the Chinese stock markets and economy, perhaps the greatest on record. but the timing is extremely difficult given the erratic stop-go Chinese central bank monetary policy.



  1. How long before our bubble follows? What will be the likely trigger?

  2. With all the mainstream bankers calling this a top after an 18% drop it looks like they are calling this correction after it is nearly over.