Following two days of soaring volatility in China's stocks, when last night we saw both Shanghai and Shenzhen pulling back into an official 10% correction before some dip-buying later on, comparisons have again emerged about the eerie similarities between the Nasdaq and the Chinese Shanghai Composite, a comparison we did over a month ago [8]...
... and a comparison which China's habitual gamblers:



... promptly ignored, sending the Shenzen soaring to ridiculous levels:
... until last night's correction.
So, courtesy of Deutsche Bank, here is yet another comparison, showing that when it comes to the Chinese stock juggernaut, not even the first Nasdaq bubble can hold a candle to the sheer mania sweeping Shanghai and Shenzhen:
- Chinese moves have been steeper than the ascent in the NASDAQ 15-16 years ago.
- For example after the recovery from the LTCM/Russia 1998 mini collapse, the NASDAQ took 322 business days to move from 2000 to the peak of 5048 in March 2000 which is around 150% price appreciation.
- The Shanghai has recently taken 291 business days to move from under 2000 for the last time to 4942 on Tuesday - a similar move of just under 150%.
- The last 150% rise in the Shenzhen (to Tuesday's peak) has taken place since 8/8/14 - in just 194 business days.
- DB China equity research has shown that of the 77% who report quarterly earnings in the MSCI China index, they have collectively seen a -3.2% YoY earnings contraction in Q1
Of course, manias end just as fast as they started, and with far more tears.
Food for thought as fundamentals and valuations have been dramatically diverging, and one final observation: DB concludes with the following "fascinating statistic", namely that turnover (Bloomberg) on the two China bourses discussed above was at a record $380bn on Thursday surpassing the $248bn on US stock exchanges and just under $9bn in the UK.
So for all those curious where the US "volume" has gone? Look no further than China.
In other words, in China "everyone" is now all in. What happens when "everyone" sells at the same time?





