Sunday, February 1, 2009

Chinese stock market before & after Spring Festival

The Chinese stock market is getting more and more independent during the financial crisis. The changes in global market does not have direct impact to the Shanghai Stock Index. Nevertheless, most stock prices was falling dramatically for the last two seasons as well as the index. However, the index went pretty strange for the week before Spring Festival (Chinese New Year). The index was going up and down without big changes. It was either open high then falls or open low then rises. Although the K-line graph was keeping a little growing everyday, the index went down on the last day - January 23rd - of the year (according to lunar calender) before the market close for Spring Festival.

The Chinese stock market close from January 24th to February 1st for Chinese New Year. There are a lot of discussion of how the market will move after Spring Festival. Everyone is hoping the market will gets better, since 2009 is the year of ox, which in Chinese is the same as bull, which let people are hoping the "bull market" is coming back. Furthermore, the last week before the market close, the Shanghai Stock Index was doing horizontal price movement, which is usually a sign of changing directions. The index has been going down dramatically in 2008, everyone is hoping this is the sign of going back up. However, considering the financial crisis, it is hard to believe the market will get better in early 2009. Besides, the scary depreciation last year has killed everyone's confidence completely; the market will not get better without people start investing again.

Investors in China are hoping the government can save the stock market by put more money in, and announce new policies. However, because of the global effect of the financial crisis plus the huge expense during 2008 (Olympic Games, Sichuan Earthquake, Snowstorm, and other disasters), the Chinese government is really lacking of money for the stock market. Moreover, new policy will not work that well as well. There was a Tax cut on stock exchange in September, 2009. It only creates a positive effect for couple days, then the market went back down again. Investors realized that the market will only warm up again if the global market gets better. Therefore, the Chinese stock market will get better in the year of ox is really doubtful. 

1 comment:

  1. awesome post Clark, its very interesting contrast of sentiment and culture mentalities that can drive the stock market over in Asia. I wonder to what extent the markets can move based off bullish sentiment that may come from ideas such as "this is the year of the ox." Overall though you brought up another interesting point, about how chinese markets have been moving independently from other markets... are you suggesting "decoupling" ???? Thats definitely opening pandoras box if you are! anyway i think we should get a discussion going on decoupling that would be a good topic everyone could learn about!


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