The Great Wall street

With the West falling over their collective selves to buy into any China related stock, it's interesting to see what the Chinese collectives think of their own stock market, which has been falling over. On the other hand, like the West, the Chinese property markets have been going like a house-a-fire, and their central bankers have their hands to the hoses, just like Greenspan and other western central bankers. A comprehensive review of the Chinese situation is contained in this article, "Stocks or real estate for China's middle class?" at http://www.atimes.com/atimes/China/GH17Ad02.html, and I commend it for your reading. Some appetising excerpts follow:

"China is one of the most savings-oriented nations in the world: total personal savings deposits amount to over 12 trillion yuan (US$1.48 trillion), or around 50% of income. For thousands of years people have been accustomed to putting money under the mattress, and the intermediating role of a banking system has been well suited to the traditional, conservative mentality of saving at a risk-free rate for the future. This mentality, however, is rapidly changing."

"Their investment horizon is typically short; they often do not fully understand the product or company they have invested in; and a "buy-and-trade" strategy is often preferred to a "buy-and-hold" strategy. These investors tend to follow the bandwagon while making investment decisions, participating previously in the 1999-2001 stock market bubble and more recently in the property market bubble."

"Over the past four years, the stock market and real estate market in China have gone in completely opposite directions. Despite robust growth in the economy, the market capitalization of stocks trading on the Shanghai and Shenzhen stock exchanges - China's two stock exchanges with over 1,400 listed companies - has tumbled 45-55% from their peak levels in 2001."

"The real estate market, on the other hand, has flourished. The property market in Shanghai, one of the hottest in China, grew 60% in 2004 over the 2003 level, while housing prices have increased 200% over the last two years."