As Expected

By George P

So... The 5-day losing streak has stopped, and the SSE Composite ended up 2.53% or 92.71 points to close at 3761.61 points.

I read this article this morning on Shanghai Daily:

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Central bank moves to raise lenders' reserves by -- CHINA'S central bank yesterday lifted lenders' reserve requirements for the second time this year after inflation hit a 12-year high last month, shoring up the need for more tightening in monetary policies. Starting...

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The Central Bank finally took action, ending speculation on what form of tightening measures would be taken. The announcement obviously settled some nerves, then Bargain Hunters raided the market for half-attractively priced stocks.

They (the Bargain Hunters) have jumped in once again, but is it such a wise move? This is just the beginning of probably a string of new tightening measures, so it wouldn't be unreasonable to expect further declines in the market as investors start to get scared again (or that pesky dog starts giving out investment advice).

One thing that stays on my mind, is the way that investors (in China) rely on the Government holding their hands: "Cry, cry, cry, the Government isn't doing anything to help the stock market. I will sell all my stocks because... because..."

Really, the typical Chinese investor needs to start thinking properly about his/her investments in depth. Time to think about consequences of one's actions.

- GP