Tuesday, July 21, 2009

China: Boom, Bust, Boom,????

I stepped back to take a look at a weekly chart of China's stocks market (FXI) and you can appreciate the tremendous volatility in this market. From 2006 to the third quarter of 2007, FXI more than tripled in value--only to lose it all by late 2008. Now we've doubled from those 2008 lows on the heels of favorable economic reports regarding the Chinese economy. Amid doubts about the accuracy of economic data in China and the impact of aggressive economic stimulus, one is entitled to wonder if boom, bust, boom might continue its sequence down the road. At the very least, the strong rise in China's shares leaves little room for disappointment should very favorable expectations not materialize.