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July 24, 2007

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Scenes from a bubble, episode 35158353

Cash that's worth morth than face value?The classic cash box trap:

On their second day of trading, units of the HSBC China Dragon Fund (0820) soared 41.5 percent on heavy turnover, driven by the irrational exuberance of foreign funds and asset managers toward the A-share market, analysts said.

Both institutional investors and retail punters, bullish on the prospects of an actively managed China fund - despite the fact that it has yet to put any money into the frenzied A-share market - snapped up the units...

"This is totally crazy. It is irrational exuberance," said Fulbright Securities general manager Francis Lun Sheung- nim. "The fund has not even started to do any investing, and [the units] are skyrocketing like magic. All they have now is just cash. It is irrational." Lun expects the unit price of the fund to correct in the near future.

Couldn't have said it better myself.

 posted by Simon on 07.24.07 at 08:48 AM in the China economy category.




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Comments:

Foreign funds and assets managers entrust China entreprizes and prospects of China economy so much that throw their powers and assets into such undertakings without even thinking that this might destroy the existing order of natural selection in the market or that this can be just a next soap bubble.

posted by: Cattlu on 07.26.07 at 08:32 PM [permalink]

Foreign funds and assets managers entrust Chinese companies and prospects of China economy so much that throw their powers and assets into such undertakings without even thinking that this might destroy the existing order of natural selection in the market or that this can be just a next soap bubble.

posted by: Cattlu on 07.26.07 at 08:33 PM [permalink]

Simon - It's rather insane, isn't it!? There's an old saying, "A fool and his money are soon parted". We can only hope that this saying doesn't come to fruition in this case. Yes, it's irrational - there's no excuse for those follow the get rich quick scheme.

posted by: MorganLighterm on 07.29.07 at 09:10 PM [permalink]

Simon - Rather insane, wouldn't you say. There's an old saying that "A fool and his money are soon parted". Yes, it's irrational, but there will always be those who want the get rich scheme to be true. Interesting post. Thanks

 posted by: MorganLighter on 07.29.07 at 09:14 PM [permalink]




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