The China A-share Market is Definitely a Rollercoster-The Question Is, Are We On the Way Up or Down?

We've finally returned from the May holiday

here in China. For all the credit China gets for working hard, and much of it is well deserved, there are three different times during the year when the entire country takes a whole week off. As a beneficiary of this policy I cannot complain because it provides ample opportunity for travel. It just cannot do much for productivity. Think if the entire US was off for a whole week three different times during the year. I cannot even think of a time where the entire country takes two days in a row off. Maybe a little lack of productivity is what you want when you are aiming to emply 1.3 billion people. Creating that many jobs in a super productive environment would be a challenge for anyone. I guess that is why when we go to department stores, there are 15 people ready to help.

Anyway, we are back and the the pent up demand for A-shares is evident. I guess retail investors didn't spend all of their money during the May holiday on stuff they probably don't need (an estimated $550 million was spent in Shanghai alone over the 7 day holiday). The Shanghai Composite Index is already up 2.6 percent for the day sitting at about 3941, yet another all-time high (yawn).

China is definitely the wild wild East and its domestic A-share stock market is a rollercoaster. The question is, are we on the way up or down. If we are on the way down, as is commonly asked at the Grand Canyon, how far is it to the bottom? Are we in for a Beowulf-like plunge? I think the above charts says it all. I'll leave it to you to draw your own conclusions. Buyer beware!