Andy Xie: Shanghai Index Fairly Valued At 2,000, Could See Bounce (Video)

Andy Xie, writer at Caijing and former economist at the IMF and Morgan Stanley Asia, has been warning about the Shanghai Index since early August and it lost 22% since then. It broke below the 50 day moving average and could eventually test the 200 day moving average at 2,479. During the Bloomberg interview Xie said there could be a September bounce but said the Shanghai index was still expensive at 3x book and 30x earnings and was fairly valued at 2,000 or less. It sounds like the Chinese asset markets got over-reflated by Government stimulus. He sees a potential slowdown in the 4th quarter and explained that it will take time for China to change their economic model (from export driven). In this Reuters article in April 2007 Andy Xie predicted the global recession.

Shanghai Composite Index ($SSEC - Stockcharts.com)

Also I found this via Twitter. Hugh Hendry, hedge fund manager at Eclectica Asset Management checks out buildings in China in early 2009 (via sovereignspeculator.com).




Recent:
Bearish Butterfly Put Strategy on FXI - China 25 Index ETF (Aug 27)
FXI Put Protection, Andy Xie On China's Bubble (Aug 17)