Video: Andy Xie Says Shanghai 'Should Be 2000 or Less'

Further to my “Shanghai cracks” post of Monday, a Bloomberg interview with Andy Xie provides additional insight. Xie is a highly regarded analyst based in Hong Kong and a former Morgan Stanley chief Asian economist.

Also read Xie’s thought-provoking article of a month ago, “Famed market analyst says China has “become a giant Ponzi scheme“.

Click here or on the image below to view the clip.

Source: Bloomberg, August 31, 2009.

Comments

[Michael Xia...:]

Ponzi scheme? Yes. The biggest? Perhaps not. Look at the US treasury bonds first.

Sep 01 02:42 PM

[LT Trader:]

Typically, many "highly regarded analysts" in the financial industry are ones who's commentary on equities and bonds generates trading revenue for their firms - they are just touting products as a buy or sell.

And even for the analysts who forecast markets (I guess these are the "honest" ones), they will be highly regarded until they start making wrong calls, it's just a matter of time when their streaky coin flipping comes to an end. Then new gurus will take over in their place.

Rinse and repeat.

RM

Sep 01 02:59 PM

[tobi:]

Interesting on how independent economist disagree with GS and MS market cheering.....

Sep 01 03:05 PM

[GMak:]

I have been wondering why the world keep praising China and its ability to turn the global crisis around. What China has been doing is switching its model from an major exporting nation to robust internal consumption. I could not figure out how this would help except for China's appetite for commodities. But even that is just another way to rid the USD. Is that enough to lift the whole world out of trouble? While China is spending its savings, we are still spending credits (at the Fed level). However, both economies have identical problems - they both have created fake rallies in the equity markets while the stimulus packages are disposed at the wrong intends. Now that China has retreated 20+%, would that be an indicator for the rest of the global equity markets (including China's (Hong Kong SAR) Hang Seng Index). When equity markets advance without fundamentals, it sure will reverse its course; it is just the matter of time.

But there is one key factor that may save China from falling off the cliff just yet. China's own 60th birthday is on October 1, 2008. Chinese government may postpone any major disaster at any cost; as they did in the 2008 Olympic. As for the US, I wonder when the plunge protection team will reverse its course...

Sep 01 03:16 PM

[Graham and ...:]

China is, apparently, "the world's last hope." We may soon find that it's not a very good one either.


On Sep 01 03:16 PM GMak wrote:

> I have been wondering why the world keep praising China and its ability
> to turn the global crisis around. What China has been doing is switching
> its model from an major exporting nation to robust internal consumption.
> I could not figure out how this would help except for China's appetite
> for commodities. But even that is just another way to rid the USD.
> Is that enough to lift the whole world out of trouble? While China
> is spending its savings, we are still spending credits (at the Fed
> level). However, both economies have identical problems - they both
> have created fake rallies in the equity markets while the stimulus
> packages are disposed at the wrong intends. Now that China has retreated
> 20+%, would that be an indicator for the rest of the global equity
> markets (including China's (Hong Kong SAR) Hang Seng Index). When
> equity markets advance without fundamentals, it sure will reverse
> its course; it is just the matter of time.
>
> But there is one key factor that may save China from falling off
> the cliff just yet. China's own 60th birthday is on October 1, 2008.
> Chinese government may postpone any major disaster at any cost; as
> they did in the 2008 Olympic. As for the US, I wonder when the plunge
> protection team will reverse its course...

Sep 01 03:21 PM

[Larry House:]

I think the main take away is that there is NO economy in the world that is going to pull us out of this. There is pain and change to go through around the world.

Sep 01 04:34 PM

[whidbey:]

Larry House is getting close to what I see. China is a place we do business and after a visit I always wonder what the pundits would say if they spend a day in Beijing and then out in the regional cities. There is no great state or stable economy anywhere. The People Liberation Army still owns a great deal of the economy and the businesses are poorly run, in debt and lie about what they are doing. We do business helping governments access their projects for completion as designed. We get the work because the natives are all willing to sell the highest bidder the result. We need to be careful because many American businesses are involved and act as cheer leaders. Watch out for social problems when the bifurcated economy splits open in civil unrest. The country sides are alive with dissonance.

Sep 01 05:34 PM

[untrusting ...:]

Very interesting links. Thanks for posting them Prieur. Always find your articles among the best written and most helpful on SA.

Sep 01 10:16 PM

[Lok Sang Ho:]

Andy Xie had been predicting run-away inflation 1 year ago.

Sep 02 09:19 AM

[Alphameister:]

2000 on the Shanghai index would give Xie a second chance to call the bottom that he failed to call when the index was BELOW 2000 late last year. He is good at calling tops because he sees them all the time, but terrible at calling market bottoms. His comment about the Chinese stock market being a Ponzi scheme merely reflects his ignorance about the nature of a Ponzi scheme.

Sep 02 09:29 AM