fawnpass

Opportunity to Sell Into China's Illusory Stimulus Package

This author, it seems, can't see the forest through the trees. He is correct in saying that the stimulus package is largely illusury, but his conclusion is faulty. The stimulus package is illusury in the sense that many of these projects, as the author stated, are already works in the pipeline. So, in essence, the Chinese government has labeled infrastructure projects that have already been planned as stimulus. This functions to reassure the world that the Chinese government will continue to invest large amounts of money on future growth even amidst a current downturn of manufacturing. It also serves to reassure investors in the chinese stock market, supporting the index. You must also keep in mind that as governments around the world infuse money into systems where large amounts of "paper" capital have vanished, in order to insure ongoing operations, the Chinese government's money spent is going into real concrete products, that will serve to create even more capital in the future.
Of course, short term rallies will offer opportunity for profit taking in such a volatile market, on this point the author is also correct. However, it would also be wise to take a long term investment position as well as a trading position in China at this time.