They say China's economy shows little correlation with its stock market, and the fact that foreigners are mostly excluded from owning shares -- even Chinese participation is limited to less than 10 percent of the population -- means the effects of a bursting of the bubble would remain contained.
What is the fun of our local financial circus when nobody panics anymore? We might have to switch the subject.
Much attention is focused on the 100 million accounts that have been opened on the Chinese stock markets, but that figure also needs a reality check. Some of the Chinese media report that only 60 million of those are actually active. Because China has two stock markets, one in Shanghai and a smaller in Shenzhen, each investor opens typically two accounts at the same time. That reduces the number of active investors to about 30 million, actually a pretty low number.
1 comment:
Isn't it more important how much money is involved, and not so much how many investors?
If it's true that there is now as much money in the Chinese market as there is in all other Asian markets combined, then a crash will have serious consequnces, don't you think.
Nobody knows how many loans are involved in the gabaling game. This could pose a thread to the stability of banks.
And don't forget, that a crash would affect the middle class in the cities. A part of the population which has benefited the most from the boom and thus was rather quiet in the past. One shouldn't underestimate the psychological consequences this could have.
But perhaps that's only my pessimistic self speaking.
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