Shanghai's Flock Market

By George P,

So, we all know that the world is in a pretty dire state at the moment, financial turmoil, etc, etc, but my eyes are on Shanghai at the moment, not least of all due to the fact that I previously had money stuffed in there.

How glad am I right now? Very. Because on the 1st February 2008, my wife and I had pretty much all of our savings in an open-ended fund. The Shanghai market plunged day after day, and we watched our profit decline steadily. Enough was enough, so I made the decision to pull out completely - of course in the long term, the gains would probably show again, but we wanted to make a quick buck (Yuan).

Seemed like a really bad decision. 1st February was a Friday, stock market was due to close for the Spring Festival holiday on the 6th. The Government took action on this day, freeing up a couple of stock-funds which were previously frozen - they had obviously had enough of the drops.

Come Monday (4th February), the index decided to jump 8 percent (upwards, naturally). My heart sank. My justification for pulling out was due to the snow storms that had hit Southern China over the previous weeks - and were said to continue. Oh dear, we withdrew at the lowest point... (luckily without loss)

Fast forward to today, and Shanghai's stock market isn't looking very healthy at all. The index currently sits at below 4000 points. My wife is happy, because now the buying price for our previous fund is far below what we sold at.

People are flying away from the stock market because gains are not likely in the short term; increasing CPI, lack of Government action, next door's ayi's brother's friend's wife's dog's recommendations - these have all affected investor confidence. The un-freezing of stock funds no longer has the effect that it had on that 'bright' 4th February day.

On the other hand though, with the index at an 8 month low, there could be some bargains available; that is, if the market doesn't crash again...

- GP