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China The engine of the global economy, the new superpower?

|Includes: Hang Seng Index ETF (HSXUF)
China The engine of the global economy, the new superpower?
 
I'm a firm believer in the efficiency or atleast partial efficiency of the markets. The Shanghai Stock Index (NYSEMKT:SSE) looks increasingly weak. In fact, the stock has zero resemblance to what a chart of the world's most vibrant economy should look like. The picture that emerges is of a slow and sluggish economy, what communism/socialism is supposed to look like. The Hang Seng just saw a trend reversal with two lower highs and two lower lows.

The engine of the global economy, prosperpus growth, the new superpower? Then why is the SSE the second worst performing stock market this year. The problem is compounded further by the fact that insider information and future government plans are more likely available than that in the United States. The most likely conclusion to draw therefore is that the insiders in China might no more about their government, future government actions, undistorted releases AND the China economic picture might no be as rosy as it seems. I love this quote by Jim Chanos, the famed short seller who’s betting against the Chinese property market right now:


“In Western economies, people are usually skeptical about the ability of central planning /governments controlling the economy and being successful at doing so; however, when it comes to China, everyone thinks 9 people in a room can get it right all the time. We don’t think so.”

How much power these 9 gentlemen wield I don’t know yet, check out my next few posts. It’s important to be in touch with the psychology of global leaders, their habits , statements tell a lot about the range of their future actions. In the case of China where these individuals yield so much power , this statement becomes even truer.

What this means for the rest of us is that China might not be the sure bet everyone is assuming it to be in the short term and maybe just maybe be even foreshadowing a global slow bear market for the rest of the world.


Disclosure: No Current Positions