Mr. Zhao

China Now Down Over 40% from Highs

I think PE should go down to around 20-25 meaning Shanghai index goes down to around 2800-3000. Though it's painful for shareholders, it's good the bubble got bursted before it got too much worse and bring even more pain in the long run. Hopefully the market will consolidate around this level and just give us 15-20% returns annually.

China Stocks: Risks Ahead

Non-food inflation is still mild. Chinese gov't should do more to promote food imports instead of hiking interest rates and reserve ratios. You are actually shorting Hong Kong H shares with FXP. IMO H shares are in the process of bottoming and shorting them at this valuation not rational. Even A share will not collapse but rather may go down to around 3000 and reach parity valuation with H shares. China's fundamentals are still bright.

Why It's Not Too Late to Short China

Downside is rather limited now since A shares historically carry a 50%+ premium over H shares. IOM H shares are already rather cheap and have bottomed. Your shorting of H shares with FXP is dangerous to the health of your portfolio.

China's inflation is the result of excess liquidity from a variety of complex factors but I do see the problem easing a bit going forward. I have great confidence in China's growth.