High Heeled Traders

Fragile China

November 27, 2015

I hope you all had a wonderful and warm Thanksgiving Day for those celebrating the occasion. It’s a half-working day too today, so it is likely that holiday-makers will stretch R&R up to the weekend, and just like Wednesday we would see light trading volumes, this day could also be very volatile owing to some contrasting market sentiment overseas — Europe confidence is high thanks to more stimulus promised (article here) but China is not reassuring at all with the latest economic report showing industrial profits have fallen yet again — 4.6% in October. (Article here) I mean, yes they keep promising stimulus, but the question is – do they work?! I’ve said it before — with Euro weakening, China has more competition from better quality, better value products that Euro-area factories are producing. Affordable Made in China or Affordable Made in Germany… you know what you’d buy…

So what’s with China, followers of my blog might remember that I’m very bearish and admittedly sceptical about the growth prospects. Last I wrote about it, the market sailed on however, but I watched it thinking it won’t last. It’s the valuation factor again, and we might dismiss those Price-Earnings Ratio (which is a handy indicator) as just a number but in real-world sense it means that people are paying a lot more for something than what they are worth. This situation is all to familiar, say you bought a shoe that looks really nice when you bought it, but after 2 times you’ve worn it, the edges immediately gape open, or basically starts to fall apart. It’s not a good feeling to have overpaid, ever!

The US might shrug it off though, since they have experienced healthy (and steadily improving) job market through all the overseas drama…. so, keep calm and give Thanks….


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