Behind the Chinese Stock Market

Robert Hsu, September 16, 2008

While the Chinese stock market still offered some excellent investments, many investors panicked about the sell-off, took their money, and ran. And after that, the funds that were going into the Chinese stock market were now being invested in other markets, like the U.S.'s.

To make matters worse, the volatility caused by these extreme sell-offs were only magnified by the proliferation of hedge funds, proprietary trading operations and other aggressive investment vehicles. And unfortunately, this is a trend that is continuing and may go on until yearend.

So I know you are wondering, "When will the Chinese markets return to their powerful uptrend?" Although this is difficult to determine exactly when this will happen, but I think that the Chinese economy is strong enough to continue growing during this global economic slowdown. Although China's import growth has slowed since July, the numbers are still strong. And considering that China's policy makers recently cut interest rates in the country, it shows that they are now more focused on growing the country's economy.

Because of these factors, I am optimistic about Chinese stocks. They are incredibly sold-off and have cheap valuations, and are ready for a recovery. And China has a good economy to support a stronger stock market, so I think we will see a rally in Chinese stocks in the coming months. And I am also looking for China's stock market recovery to lead other emerging markets higher as well.

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