Five things you should know about Chinese stocks

Saxo Capital Markets Australia

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Pauline Loong, managing director of Asia-Analytica Research has put together five observations every investor should know when investing in Chinese stocks. After experiencing the loss of US$3.4 trillion in share value in only three weeks (close to US$1 billion for each minute of trading on mainland exchanges), her observations are worth reading. Firstly, Loong explains the panic measures taken by China to arrest the fall in share prices and confidence –which were quite astounding– are ironically fanning the very investor fears that Beijing hopes to dispel: fears that the rally cannot continue without life support. Second, textbook metrics matter very little in a market like China, which has turned cynical by endless scandals and outright fraud over the years, and "cheap" is a relative concept. “A stock considered cheap today could be even cheaper tomorrow, as Japanese investors have found to their pain over the past decade”, she says. Third, the Chinese stock rally had never been about company or economic fundamentals. To read more visit: (VIEW LINK)


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