Posted on 03/27/2008 3:38:55 AM PDT by TigerLikesRooster
China's markets may fall further as Olympics near
Higher inflation means more tightening; U.S. market fallout causing pressure
By Moming Zhou & Lisa Twaronite, MarketWatch
Last update: 12:01 a.m. EDT March 27, 2008
SAN FRANCISCO (MarketWatch) -- China's already battered stock markets could tumble further against a darkening economic backdrop ahead of August's Olympics Games, as the U.S. recession begins to take its toll and China further tightens its monetary policies to combat runaway inflation.
After quintupling in just two years, China's benchmark Shanghai Composite Index has plunged 40% since peaking at an all-time high in October, confounding the expectations of investors who expected the remarkable run to continue through the Games. Troubles in the domestic economy and as well as the international credit crisis weighed on markets, and those troubles are not likely to disappear even after the Olympics, analysts said.
While the ongoing unrest in Tibet is unlikely to have much of an impact on the Olympics, the stock market or the economy at large, turmoil never sends a comforting welcome signal to investors, especially when a market is already under pressure.
"It is a mistake to try to tie China's stock market performance to the Olympics," and those who assume the Games will help to shore up the markets are likely to be disappointed, said Donald Straszheim, chairman of Straszheim Global Advisors and an expert on Asian economies.
"The bubble in China's stock markets has already burst," said Straszheim. "It burst in October." While the Shanghai Composite Index is now under 4,000, compared with October's high of 6,092.06, some analysts still aren't calling a bottom.
(Excerpt) Read more at marketwatch.com ...
Ping!
Ping!
>>”It is a mistake to try to tie China’s stock market performance to the Olympics,” and those who assume the Games will help to shore up the markets are likely to be disappointed, said Donald Straszheim, chairman of Straszheim Global Advisors and an expert on Asian economies.<<
I would think the opposite - that the government spending and construction will greatly decrease after the games.
It is going to take 3-4 years after that for the average worker's pay to catch up. In the meantime, average middle income (<$70K / yr incomes)Americans will struggle to house and feed themselves.
Our monthly paycheck would have 8 digit to the left of decimal point. Soon after, U.S. Treasury will issue new bank notes to reduce number of zeros in balance sheets which kills extra number of trees (or requires more memory storage.)
By the way, I gather that the only thing Fed learned from last Depression(30’s) is the determination to inflate out of their problem.
Time to cut foreign aide.
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