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Hanergy Contagion Sparks Chinese Investor Rotation From Shenzhen "Ponzi" To Shanghai "Safety"
It appears the reality that we exposed in all its unbelievable ponzi-ness has filtered into the psyche of Chinese investors.. though ever so gently for now. Hanergy's self-dealing self-referential loans collateralized by stock and Goldin financial's farcical flop, along with 500% return year-to-date stocks by the dozen, has sparked some selling with CHINEXT down around 4%, Shenzhen down 1-2% (both heavily dominated by these high-flying idiot-maker stocks) while Shanghai Composite and CSI-300 (China A-Share proxy) is bid...
because why wouldn't you greatly rotate to the index that is only up 47% YTD and not 92%?
Charts: Bloomberg
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Hello SGE
because why wouldn't you greatly rotate to the index that is only up 47% YTD and not 92%?
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because the P/E ratio on most of the largest stocks remains ~10 or below, even after the rally (the overall average is ~22 when equal-weighting the very small components). when you buy a value-weighted index, you're really buying the largest stocks.
western hedge funds have been beating down chinese stocks since the initial stock recovery in 2009. a more honest analysis would show the comparitive DOW vs. China charts above starting early 2009.
All stock indices are headed the way of the Chinext and Shenzhen which are simply canaries in the coal mine. The divergence between the Dow Jones Transports and Industrials is a Dow Theory waring of a coming market collapse. The Industrials are in the process of peaking if it it hasn't already done so...
DJIA
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
Dow Theory non-confirmation
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...