Wednesday, July 29, 2009
Is the next bubble in China? I vote "Yes"
The writing is on the wall. China's stock market is up an astounding 79% year to date. Unbelievable, but considering that last year their markets got clobbered, it is somewhat too much too soon. On top of that, Chinese banks are lending like crazy and building everything everywhere while they are still holding loads of US dollars.
In one sense, its a smart strategy in some sense, as John Mauldin pointed out...they are playing a game of "old maid", where they don't want to be the last one holding US dollars. In another sense, they've stimulated too much rather than let natural growth occur. More and more IPO's are hitting their market, which means the top is near and a beatdown is coming. Long term, they'll be a good buy, but not today.