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The Economist predicted this crash in May, and has a series of good articles about it: http://www.economist.com/blogs/freeexchange/2015/05/chinas-stockmarket ht

The Economist predicted this crash in May, and has a series of good articles about it: http://www.economist.com/blogs/freeexchange/2015/05/chinas-stockmarket http://www.economist.com/blogs/freeexchange/2015/05/chinas-s... China's stockmarket is sufficiently weird to defy most normal analysis though: there are heavy restrictions on who can list and who can invest, plus China in general has lots of money sloshing around looking for a decent place to invest, because the usual mainstays like bank deposits have zero to negative returns. So the bubbles and pops there (and this is far from the first) don't have a lot of correlation to the health of the overall economy.

chetanahuja 11y ago
"China in general has lots of money sloshing around looking for a decent place to invest, because the usual mainstays like bank deposits have zero to negative returns" Umm... this is the situation everywhere right now. This is one of the reasons that big money from hedge funds etc. has started moving to riskier bets in venture capital territory.
intrasight 11y ago
>there are heavy restrictions And don't forget the fact that short selling was illegal until earlier this year, and even now only a limited number of stocks are allowed to be shorted.
- rsync 11y ago
  "And don't forget the fact that short selling was illegal until earlier this year, and even now only a limited number of stocks are allowed to be shorted" ... which means the crash will be even faster and more brutal. Remember, short positions close by buying the shorted security. This means that in a healthy (albeit declining) market there is always buying at every level down as shorts cover. Limiting short selling is a misguided feel-good move ... a PR stunt that only serves to make the pain worse.
joosters 11y ago
An expensive prediction. Sure, they are now right, but the index grew from 4250 at the time of that article to over 5000 before this latest crash. Anyone shorting the market on their prediction would have most likely been wiped out before they could make a profit. Calling the top of a market is difficult, and to be fair, the Economist hasn't done too badly here. However, you've got to call the bottom too. Will the Economist be able to say if the current market price is now 'correct' or not? Has the bubble burst or is there more to go?

chetanahuja 11y ago

"China in general has lots of money sloshing around looking for a decent place to invest, because the usual mainstays like bank deposits have zero to negative returns" Umm... this is the situation everywhere right now. This is one of the reasons that big money from hedge funds etc. has started moving to riskier bets in venture capital territory.

intrasight 11y ago

>there are heavy restrictions And don't forget the fact that short selling was illegal until earlier this year, and even now only a limited number of stocks are allowed to be shorted.

rsync 11y ago
"And don't forget the fact that short selling was illegal until earlier this year, and even now only a limited number of stocks are allowed to be shorted" ... which means the crash will be even faster and more brutal. Remember, short positions close by buying the shorted security. This means that in a healthy (albeit declining) market there is always buying at every level down as shorts cover. Limiting short selling is a misguided feel-good move ... a PR stunt that only serves to make the pain worse.

joosters 11y ago

An expensive prediction. Sure, they are now right, but the index grew from 4250 at the time of that article to over 5000 before this latest crash. Anyone shorting the market on their prediction would have most likely been wiped out before they could make a profit. Calling the top of a market is difficult, and to be fair, the Economist hasn't done too badly here. However, you've got to call the bottom too. Will the Economist be able to say if the current market price is now 'correct' or not? Has the bubble burst or is there more to go?