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Honest Information, Profitable Trading

Durudarshan - Investment Analysis

My Blog


Shocks of the Shanghai market are resonating

Posted on July 27, 2015 at 10:58 AM Comments comments ()
The huge percentage falls in the Shanghai Index are having some resonance in the world markets, and show no signs of abating. 

The capital which the Chinese government had authorised, about a Trillion Dollars only a few months ago, and which was being loaned to the people and who in turn were putting it into the stockmarket, seems to be wiped out.  It seems like smoke and mirrors, it's here, it's there, the illusion keeps whirling - and then suddenly it has disappeared.  The investors must be shocked and sore at their losses, just as they must have had happy days seeing how their investments were fattening up so readily. 

The downturn has not been very pleasant for anyone, and certainly not for the Chinese government.  It is no fun for them to see their people lose money.  It must seem like they have all been universally robbed - and not by some outsiders, but by some technical mechanism that created the bubble in the stockmarket and gave it the illusion of being something very substantial.  The only thing substantial are the losses people have suffered.  The markets have had a frightful fall, to the Chinese it is their 1929 revisited. 

Markets throughout the world seem to be resonating the falls in the Chinese markets, and there is no sign of it coming to a stop.

It may turn out that the market falls in Europe and U.S. will have been overdone.  Indeed, for Oil sector stocks, it may be a buying opportunity*. 

With the current glut of Oil supplies, with tankers and storage facilities full, I expect the price of Oil to head towards $40* in a matter of five weeks, then towards $30* once the Iranian supply hits the markets.
(*Please gamble at your own risk, I am merely expressing my view.)

The Chinese government will have to set up some measures to try and comfort the people who have lost everything.  Stockmarket investment may have been a this-generation activity for a lot of them, who may have taken it up with some reluctance but then took it up with great enthusiasm seeing how easily their money was increasing in value as the market went up.  But now the shock of losing their capital, especially borrowed capital, will have them asking what it was all about. 

The government could of course issue some more capital, and lend it to the people to invest in ventures where they may recoup their losses.  They must offer them some hope, so the losses do not become a trauma.  Some may even write stories or draw up pictures from their experience, that may be something the audience can benefit from.

There will be brighter days and brighter circumstances, hope springs eternal in the human heart.  Paint a picture, or read the Bible, or read a love story, anything to soothe the pain away.

Kind regards,


3:56pm  London