Gentlemen, i thought i would give you a quick overview of what i have learned here in the last two weeks. I will be here until christmas so i will help in any way i can.
First off, beware of these chinese stocks now and in the near future. As their economy continues to roll right along, the bubble they are blowing out here is getting out of control. There is no way it can sustain the growth we have seen in the past few years. One obvious reason will be interest rates, as we all know they will rise sooner than later and this isnt good for equity markets as a whole. The main reason though is the credit squeeze that is ocurring out here. The chinese gov't is finally tightening up banks, particulary in lending. The lending was already out of control and they are now realizing this fact. Most all of the chinese banks are bankrupt. They would never let the world know this but it is a fact. When you see the central gov't lending 12billion US$ each to two large banks, you begin to scratch your head. Furthermore, more lending to bankrupt banks is in the works. These banks would give a homeless man on the street a loan to buy a new 10,000$ car and not think twice about doing so. In commercial and residential areas they are scaling back lending in major ways. Trade finance is another story. While we (cotton merchants) are feeling the effect now as far as getting them to establish and open up new and existing L/Cs. This is an area that they can't afford to slow down as fast as they can in commercial, residential, and real estate areas. By area, i mean trade financing, not just cotton imports and exports of raw cotton, textiles, yarn ect...But the whole trade financing area. As much as the world thinks that the communists are not in control, they still have that mentality. Next year will be a very important year for the world. China will drop tariff rate quotas in turn flooding the markets with all their supplies they have built up over the years. The US and Europe will be the hardest hit in my opinion. The most confusing part about all of this is how they can make money when they continue to buy commodities, goods, services, ect.. at huge prices and then turn around and sell their products to the world at rock bottom prices. It just doesn't fit any business model. Sorry that i cant talk specific stocks or sectors, but i think this will give you some understanding about was exactly is going on out here.
First off, beware of these chinese stocks now and in the near future. As their economy continues to roll right along, the bubble they are blowing out here is getting out of control. There is no way it can sustain the growth we have seen in the past few years. One obvious reason will be interest rates, as we all know they will rise sooner than later and this isnt good for equity markets as a whole. The main reason though is the credit squeeze that is ocurring out here. The chinese gov't is finally tightening up banks, particulary in lending. The lending was already out of control and they are now realizing this fact. Most all of the chinese banks are bankrupt. They would never let the world know this but it is a fact. When you see the central gov't lending 12billion US$ each to two large banks, you begin to scratch your head. Furthermore, more lending to bankrupt banks is in the works. These banks would give a homeless man on the street a loan to buy a new 10,000$ car and not think twice about doing so. In commercial and residential areas they are scaling back lending in major ways. Trade finance is another story. While we (cotton merchants) are feeling the effect now as far as getting them to establish and open up new and existing L/Cs. This is an area that they can't afford to slow down as fast as they can in commercial, residential, and real estate areas. By area, i mean trade financing, not just cotton imports and exports of raw cotton, textiles, yarn ect...But the whole trade financing area. As much as the world thinks that the communists are not in control, they still have that mentality. Next year will be a very important year for the world. China will drop tariff rate quotas in turn flooding the markets with all their supplies they have built up over the years. The US and Europe will be the hardest hit in my opinion. The most confusing part about all of this is how they can make money when they continue to buy commodities, goods, services, ect.. at huge prices and then turn around and sell their products to the world at rock bottom prices. It just doesn't fit any business model. Sorry that i cant talk specific stocks or sectors, but i think this will give you some understanding about was exactly is going on out here.
