On China Elections and Governance, David Kelly translated an essay by Liang Jing:
On October 30, Alan Greenspan issued another warning on the risk of a Chinese stock mar¬≠ket bubble. A few months ago, when China’s stock index rose by more than 90% over a year, Greenspan expressed concern that the market could experience a “dra¬≠ma¬≠tic shrinkage.” At present, the Shanghai and Shenzhen 300 Index has risen 170% this year, allowing China to surpass the US in the number of its companies within the world’s ten largest by market value for first time. October 24, investment master Warren Buffett also issued a warning that China shares were rising too fast.
The judgments of “Greenspan” and “Share God” Buffet may not always go unchallenged, but few financial experts would deny that China’s stock market prices and risks are on the high side. Interestingly, China’s crazy stock market resembles its hypertrophic economy in repeatedly having the last laugh on pessimists’ predictions, leaving at least some experts wary of forecasting what the price level of China’s stock market will be, or how a major adjustment might take place. It appears that as with “socialism,” stock market bubbles in China have some indefinable “Chinese characteristics.” [Full Text]
