I stole this from Wei Gu of Reuters. He wrote it on November 23, 2007
Much of the stellar growth in Chinese corporate earnings has been generated by the rise in stock values because many companies have invested heavily in the market rather than core businesses.
It's a virtuous circle: if the market goes up, earnings go up, and if earnings go up, the market goes up. Neat. Now replace the word "up" with "down".
Those piscky American papers have found their way into many of the Asian banks. Just as Citibank and JP Morgan have had to write off assets, so have the Asians. With the excuse "The Americans are the problem" Asian banks are free to admit the lose. The irony is they are under pressure to proclaim their loss while they have this oppertunity. Word that USA banks are getting funding tightens the window of oppertunity.
The down cycle is about to begin.
By buying EEV FXP or EWV you are buying into a short position.
$75.06 (11/28/07)
