Saturday, March 29, 2008

Even Red Hot China is starting to Slow Down/fall....

As my posts in the recent months have been U.S. economy focused I thought I would share some insights into what is regarded as the fastest growing economy in the world. The Chinese economy is forecast to be larger than Japan and the U.S. economy by 2015 :)

Chinese stocks had been trending upward at an ever accelerating rate (i.e. parabolic) since 2005. The parabolic nature of the Chinese rally came to an end as the US housing market/credit crisis began to take hold in Q4 2007. Currently, the iShares FTSE/Xinhua China 25 Index (FXI) trades within the confines of a significant downtrend.

I would also note that the Chinese government was trying to put curbs into their banking system and trying to have banks build up their capital base via loaning out all their $$$ during this time frame as well. With so much of their economy tied to their economic development (ie. real estate in China) the government had a good amount to be concerned about. The SMOG is INSANE. Having personally been to China some 15 years ago I'll attest that I was AMAZED to see entire DOWNTOWN projects (10-15 skyscrapers) going up at one time while several MAJOR 10-12 lane highways were being constructed as well.

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Source -
Source - iShares

Dan Ross

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