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Shanghai Drops To Two Month Low, As Chinese Stocks Are S&P Performance Mirror Image YTD
Even though news of the Chinese rate hike have so far spared the US stock markets, the Shanghai Composite, the SHCOMP, is now down 5 days in a row, and is back to a level last seen in October 2010, at 2,733, following a 1.7% overnight decline. What is more peculiar is that the main Chinese index is now down almost 15% from the highs reached in the recent upswing, specifically the 3,160 close from November 8. Yet during this entire time, the US stock market continues to melt up on ever lower volumes, and if futures are any indication, last night's latest drop in Chinese stocks will be ignored yet again, as the reverse decoupling thesis is now the prevalent paradigm, 4 short months after it was China's turn to "grow" the world out of the re-recession.
The charts below show the relative performance of the S&P and the SHCOMP on a one month and YTD basis. What is interesting is that the two are mirror images on a YTD basis, with the S&P up 12%, while Shanghai is underperforming by the same amount.
Yet the same question from a valuation standpoint shows that Chinese stocks, on virtually every multiple (EV/EBITDA, EV/Revenue and P/E), are still materially overvalued compared to the US.
Index EV/EBITDA:
Index EV/Revenue:
Index P/E:
Basically, China continues to be dramatically overvalued on a fundamental basis, while the US is the same on technicals. Since the two net out in this bizarro world, where according to "experts" massive snow fall is good for retail sales, we see no reason why the status quo can't continue to infinity and beyond.
Charts: CapIQ
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These guys are such losers. They can't even manipulate their stock market right.
Apparently Tyler is unaware that the growth is moving back to the USA. We'll be exporting fraud to lesser countries across the globe.
In addition to fraud you omitted the growing US export of diplomatic cables. The US has a distinct cost advantage in this technology and is a renowned world leader.
Sales of home discretionary items are down in the Orient. Put Harry Wanker on a plane to Bejing. One way.
well, haven't you heard they have inflation 100% under control which means stock prices as well.
+1
Who cares about the Chinese market when you have virtually infinite supply of dollars from Dr. Bernanke???
Bolsa index explained: su caca es mi caca
Going to be rough mkts for 11, Shanghai topped way back in aug 09.
Mkt sees their Europe export falling apart.
it is really quite simple Western Central banks are providing massive liquidity, with the desire to cheapen their currency while exporting inflation to the Chinee who might be tighter....buy de dip
Just like the BDI and ECRI, China is only relevant when it's going higher.
Gold $1405 @0826 Somebody got back from Christmas vacation
futures are up because tlt hit its high hesterday, so now the big boys can seel some of that and make a profit as well and throw that into nthe markets, on top of fed as well
futures have very little to do with economic data, it has to do with trading and low off hour volume allows great manipulation
Ben and his gang will run away one day with the loot, watch out
Sorry, one post got repeated so many times, I don't know how?
Chinese market is down because it isn't manipulated like the US market.......