The new world order ...... get used to it.
Tuesday 14th April 2015
"Get ready for Shanghai to become the world driver" ,
Viewpoint, The Daily Telegraph, p.B2
The news yesterday that China's exports fell by 15% in March
(imports also fell by the biggest amount since the crash of 2008/9) was pretty
disappointing by anybody's standards. So what happened to Shanghai's Composite
Share Index ? You guessed it .... it rose 2%.The Runaway Train metaphor has
seldom seemed so appropriate. Shanghai's index has doubled over the last year,
and risen 25% since February. The moves that have taken European and US markets
to new highs seem snail-like in comparison.
Some might argue that it's all completely overblown, a bubble
waiting to burst. They might have a point. The fact that 20% of stocks on the
exchange trade on a P/E ratio of over 100 and technology stock levels make US
equivalents at the peak of the dotcom boom seem cheap is downright frightening.
The Chinese are known for being fearless gamblers, but even if this explosion
of "exuberance" is followed by an even sharper correction, make no
mistake ...... things have changed.
Matthew Lynn argues that the rise of the
equity index in such a huge economy, and the sea of money it will create, will
change the order of things irrevocably with regards to global markets. Already,
more than half of the world's top 20 investment banks (by market
capitalisation) are Chinese, not that the man in the western street is likely
to have heard of them. In the future, a trader's first question will not be
"what happened to the Nikkei or Dow Jones overnight ?" ,
but "what's going on in Shanghai?"
No comments