Thursday, August 20, 2009


The Chinese stock markets are finally correcting. And how!!

World markets today are tracking the daily movement of the Shanghai Composite.
A 5% down move in China, results in a sell off across world markets.

Since China led the markets on the way up, could the Chinese markets be signalling the start of a new leg down?

As we head into 2010, governments across the world are crowding out private sector borrowing in the bond markets. Given that growth rates are still extremely anaemic (or non-existent), we are definitely going to need more stimulus packages in the near future.

China can never substitute American consumer consumption with local Chinese consumption in the near term. The domestic market in China has a long way to go before it rivals the '''credit loving - consumer driven - overspending habits'''' of the US consumer!

Markets meanwhile may have run up too far too fast; and are only beginning to realize that the worst may not necessarily be behind us.

Here's a quote from Abheek Barua (chief economist, HDFC Bank).
'' The fact that the worst is behind us does not necessarily mean that the best is around the corner. That's something that all of us need to recognize.''

No comments: