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China Stocks

Took the selloffs as oppertunity

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I know it’s not easy, especially last night (morning in the US), when we saw the market took another dive (Dow was down 300 in the begining of regular trading). But we have all been there, remember the Feb 27 “Chinese crash” and subsequent US market crash?

More recently I remember the May 30 “Chinese crash 2.0”, which happened after the goverment raised the (stock trading) stamp tax. This is used as a milestone for many analysts, and mutual funds here in China. Before that the market was filled with retail investors and they bought all kinds of craps: those so called “concept stocks”, companies which has little organic growth, but with the potential to being acquired for the “shell”; or companies who happened to own some “hot bank stocks” which will IPO soon…May 30 changed all that.

The Chinese market already recovered from the crash, and with a twist: this time around the leading stocks are those banking and real estate stocks, which have the revenue, profit and growth to back it up. Who is the winner in this period? Those people (mostly institutions, mutual funds, QFII, etc.) who picked up the bank and real estate stocks amid market downturn started after May 30 (crash).

This is just one example how we could take advantage of a downturn market. We can not fight against the broad market. But when everything is on sale, we have better oppertunity to buy real good stocks (companies) at a better price.

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