The Chinese stock market has dropped 30% in a month — but before you go out running for bargains, note that it is still 80% higher than it was last summer.  The bubble may have further to deflate.   Here’s a quick clip from yesterday with the tale.

One Chinese stock that may not have been overvalued, as argued here before, and whose sudden sharp drop may be a case of a perfectly good baby having been thrown out with the bathwater, is CISG.  I bought more yesterday at $5.76.  I’m told it has $8 or $9 of cash per share, so in effect, at $5.76 [update: $6.83], you’re getting its profitable automobile insurance business for free.  Indeed, you’re being paid handsomely to take it.  Just as you were a year and a half ago, if you bought shares at $5.40 when first suggested, before they doubled.  (“This would be an obvious time to sell half and, with house money, see what happens with the rest,” I suggested a few weeks ago, with the stock at $11.  In case you did sell half, it might make sense now to buy them back.)  Note that someone just paid $11.80 a share for $37 million worth, which gives me further comfort there may be value for us here at $6 or $7 a share.


It’s not just in their infratsructure that China is leap-frogging.  Get a load of this two-minute 2013 New Year’s Eve fireworks display from a town in Hunan province.  (Thanks, Glenn.)  Of course, the Chinese invented fireworks.  [OOPS. Mike Martin:  “I believe the Hunan fireworks video is fake: notice that YouTube describes it as ‘FWSim’ which is software for simulating fireworks displays on your computer.”]


Mentioned here and here, this may be a cliffhanger.  If you were smart enough not to buy the zero coupon bonds at $92 each, when I did, you may now be able to get them for more like $65.  Only with money you can truly afford to lose.


Some lucky — or unlucky — bastard bought a few shares Tuesday at $6.70.  That values the whole company at less than half what Demi Moore is asking for her apartment.  One day, we’ll all look back and laugh.  Either at how I actually could have believed any of this (like Isaac Newton buying shares in the South Sea Bubble?) . . . or else “all the way to the bank.”  No Isaac Newton, my strong assumption, nonetheless, is that the stock dropped not — likie an apple from a tree — because anything has come unhinged, but because a shareholder got bored and sold.


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