Wednesday, June 3, 2015

China stocks could now see a strong correction

We live in a world with excessive liquidity created by money printing of central banks. That liquidity flows into real estate, stocks, bonds, art and commodities from one place in the world to another.

Relative to the US, China’s stock market has become inexpensive. So, we had recently this huge bull market in Chinese stocks with colossal speculation. It doesn’t mean that the whole thing will collapse and make new lows. But after this burst of volume, we could easily see a significant correction.

I bought China Life Insurance at HK$21, and now it’s close to HK$40. It almost doubled in less than six months. I think it can easily drop 20% to 30%.