Mani i Kina

"I feel today the way I felt in 1999-2000. The way I felt in 2007. Where the cycle is getting very extended. Things feel really excessive. And it's really frustrating, because I feel that the markets are not pricing risk properly, and yet they keep going up. And I really feel like banging my head against the wall. In the most recent issue of my newsletter, I say I spend more time at the gym because the alternative is banging my head against the wall, and that's really bad for the wall." (Michael Lewitt, Value Investing World)

Om Grekland går i konkurs de kommande dagarna finns det inga större risker med konkursen i sig självt. Nu ägs de grekiska statsobligationerna av stater, europeiska stödmekanismen och IMF. Möjligtvis kan det bli vissa spridningseffekter från den grekiska banksektorn vid en grekisk betalningsinställning.

Risken är snarare att andra länder förlorar förtroendet på marknaden och att dessa länders obligationer inte ägs av "stater" eller "myndigheter", då blir det ett riktigt ståhej. En grekisk betalningsinställning skulle framförallt påverka riskaversionen och den är väl så viktig. Grekland bör inte vara systemviktigt längre.

Världsekonomin går inte så bra som alla önskar sig och ECB förväntar sig att mirakelkuren QE ska lösa alla problem. Framförallt sänker QE värdet på Euron, men detta innebär att något annat land får dras med en starkare valuta. De flesta analytiker tror att USA ska förbli opåverkad av den allt starkare dollarn och man får väl hoppas att så är fallet. Riskerna tilltar, men ingen bryr sig.

Lögn, förbannad lögn och statistik. Som med allt annat här i världen beror världsuppfattningen av hur man väljer att se på saker och ting. Personligen anser jag mig vara en "realist", vilket i praktiken innebär att jag är en pessimist. 

Att börserna i Kina varit i en större bubbla tidigare är irrelevant för att bedöma nuläget. Vad man bör notera nedan är värderingsläget, euforin, tillströmningen av spekulanter och ökad belåning för att köpa aktier. Man bör komma ihåg att Russel2000 är väldigt övervärderat i dagläget och jämförelser med Russel2000 är inte rättvisande för en "rimligt" värderad marknad.

"Falling profits and rising share prices usually don’t mix. Bullish investors note that the average price-to-earnings (P/E) ratio for the Shanghai index has jumped from just 10x to 15x — close to its historical average and still well below the current 18x for the United States’ S&P 500. But Chinese banks weigh down that average because investors heavily discount them, believing (correctly) that the banks are facing a wave of unrecognized bad debt. The median P/E ratio for companies listed in Shanghai is 30x; for China’s second exchange, in Shenzhen, it’s 39x. A third of the stocks in Shanghai and half in Shenzhen have P/E ratios higher than 50x; 10 percent in Shanghai and 18 percent in Shenzhen exceed 100x. These are bubble valuations. (By comparison, fewer than one in 10 stocks in the U.S. small-cap Russell 2000 have a P/E higher than 50x, and only 4 percent have a P/E above 100x.)

These valuations have been fueled by an explosion in margin lending. Chinese securities firms have lent an estimated $264 billion to fund stock purchases, about four times as high as when the rally started in July and up 50 percent since January — when regulators announced they would crack down on such lending. The level of margin lending is now about twice as high, relative to market capitalization, as on the New York Stock Exchange. Many “shadow,” or non-bank, investment vehicles in China that were funding property projects have switched to financing stock speculation. In fact, the downturn in China’s real estate market — and its broader economy — may be helping to fuel China’s stock market rally, as Chinese savers and the Ponzi schemes that cater to them search frantically for returns."(Länk)

"The industry is leading gains in China’s $6.9 trillion stock market, sending valuations to an average 220 times reported profits, the most expensive level among global peers. When the Nasdaq Composite Index peaked in March 2000, technology companies in the U.S. had a mean price-to-earnings ratio of 156."(Bloomberg, 2015-04-07, Länk)

"The retail-dominated market has seen record volumes and unprecedented margin lending, and Shenzhen stocks have outperformed on hopes that "new economy" stocks will play a bigger role as China shifts away from manufacturing and towards consumption." (Länk)

"The 103 stocks in the Shenzhen 500 percent club trade at an average 375 times reported earnings, while their average market capitalization has risen to $3.5 billion, according to data compiled by Bloomberg. Many of them recently sold shares for the first time." (Länk)

"• More than 10 million new stock accounts have opened so far this year, more than the total number for all of 2012 and 2013 combined, according to data from China Securities Depository and Clearing.

• Many of these new players appear to be inexperienced retail investors, who are likely following the advice of friends or state-controlled media. “I’m just dabbling,” 32-year-old Liu Wei told the WSJ. “If all your friends are buying stocks and talking about it, and you don’t buy, then you have nothing to talk to them about.”

• About two-thirds of new equity investors left school before the age of 15, according to data from the China Household Finance Survey carried in a recentBloomberg report. About a third left at age 12 or younger.

• Six percent of new equity investors are illiterate,Deutsche Bank said in a note about the “Chinese share frenzy.”

• New investors also have relatively low levels of asset ownership. Household wealth is about half the level of existing investors.

• Median earnings multiples for Chinese technology stocks are twice U.S. peer valuations at their dot.com peak, Deutsche Bank said. More worrying perhaps, the note added, is a health-goods-from-deer-antlers producer on 70 times, the seamless underwear manufacturer on 90 times or those school uniform and ketchup makers on 330 times.

• At the Shenzhen exchange, famous for its many tech firms, half of stocks with analyst estimates have a forward PE above 50, writes James Mackintosh, a Financial Times blogger who called the market “insanely expensive.” In the past year, almost half of all shares in Shenzhen have doubled in price or better.

• Likewise, over a third of stocks in Shanghai with analyst estimates have a forward PE above 50. In the past year, four in 10 stocks have doubled in price or better.

• The Chinese are the world’s most optimistic investors, according to a Legg Mason LM -0.63% and Citibank survey. About 60% of them plan to increase their equities this year." (Länk)

Detta måste vara en mani! Manin är koncentrerad till Shenzhen och Shanghai för tillfället. Det ska bli intressant att se hur högt Shanghai Composite kommer gå, men samtidigt bör man inte förvånas av hastigheten i kraschen när partajet tar slut. Exakt hur länge till denna lekstuga kan hålla på vet jag ej och det är inte meningsfullt att försöka gissa.

Bör man förvänta sig ett fruktansvärt utfall av en krasch på den kinesiska marknaden? Förmodligen inte, men en till tillgångsklass har utvecklats till en spekulativ karusell i Kina och det är inte direkt positivt. Risken är snarare att börsen faller i samband med att andra delar av Kinas ekonomi får problem!

(Rött anger antalet nya konton i Kina. Länk)

FIRST

Regulation and more orthodox economic knowledge are not what protect the individual and the financial institution when euphoria returns. There is protection only in a clear perception of the characteristics common to these flights into what must be described as mass insanity. Only then is the investor warned and saved.

SECOND

The more obvious features of the speculative episode are manifestly clear to anyone open to understanding. Some artifact or some development, seemingly new and desirable captures the financial mind or what so passes. The price of the object of speculation goes up. This increase and the prospect attract new buyers; the new buyers assure a further increase. Yet more are attracted; yet more buy; the increase continues. The speculation building on itself provides its own momentum.

THIRD

This process, once it is recognized, is clearly evident, and especially so after the fact. So, also, if more subjectively, are the basic attitudes of the participants.

These take two forms:

There are those who are persuaded that some new price-enhancing circumstance is in control, and they expect the market to go up and stay up, perhaps indefinitely. It is adjusting to a new situation, a new world of greatly, even infinitely increasing returns and resulting values.

Then there are those, superficially more astute and generally less in number, who perceive or believe themselves to perceive the speculative mood of the moment. They are in to ride the upward wave; their particular genius, they are convinced, will allow them to get out before the speculation runs its course; They will get the maximum reward from the increase as it continues; they will be out before the eventual fall.

FOURTH

For built into this situation is the eventual and inevitable fall. Built in also is the circumstance that it cannot come gently or gradually. When it comes, it bears the grim face of disaster. That is because both groups of participants in the speculative situation are programmed for sudden efforts at escape. Something, it matters little what, triggers the ultimate reversal.

FIFTH

Those who had been riding the upward wave decide now is the time to get out. Those who thought the increase would be forever find their illusion destroyed abruptly, and they, also, respond by selling or trying to sell. Thus the collapse. And thus the rule, supported by the experience of centuries: the speculative episode always ends not with a whimper but with a bang.

SIXTH

So much is clear. Less understood is the mass psychology of the speculative mood. When it is fully comprehended, it allows those so favored to save themselves from disaster. Given the pressure of this crowd psychology, however, the saved will be the exception to a very broad and binding rule. They will be required to resist two compelling forces: one, the powerful personal interest that develops in the euphoric belief, and, the other, the pressure of public and seemingly superior financial opinion that is brought to bear on behalf of such belief.

SEVENTH

Contributing to and supporting this euphoria are two further factors little noted in our time or past times. The first is the extreme brevity of the financial memory. In consequence, financial disaster is quickly forgotten. In further consequence, when the same or closely similar circumstances occur again, some times in only a few years, they are hailed by a new, often youthful, and always supremely confident generation as a brilliantly innovative discovery. There can be few fields of human endeavor in which history counts for so little as in the world of finance.