Wednesday, March 30, 2005


Shanghai Stocks At 6 Year Low

Globalism has hit the skids in China with the Shanghai index falling to levels not seen in 6 years. Some blame an increase in interest rates. "The government has taken a series of steps, such as the housing loan rate increase, to cool the overheating economy. It's estimated that tougher ones will follow," said Wang Kai.

The article in Asia Times Online points to a more likely reason. "The root cause of ailing investment confidence is that there is very little or even no return for investors. For more than a decade, many listed companies have regarded the bourses as cash cows and have not cared about investor sentiment - rarely paying dividends and often providing fake information. The fact that about two-thirds of the shares of domestically listed companies are non-tradable and lying in the hands of the state has left very little room for initiative, or enthusiasm, for public investors."

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