Today's Business Times carried an interesting article on China's growth..it asked the question whether the growth in China was really economic or just a miracle performed by accountants.
" Take the 8 % second quarter growth which grabbed most of the headlines. Less conspicous was that exports in June actually declined by 21.2 % year on year while first half exports declined by 20%. These lesser known figures beg the question: Where did the growth come from.?"
Creative accounting plays a big part in creating the impression of rubust growth.
DBS referred to the China markets's high valuations, which it described as unsustainable. According to Bloomburg, the Shanghai composite sells for 31 times earnings and is supported by a paltry 1.4 % divident yield.
The Shenzhen composite figures are much worse.
67 times earnings supported by 0.7 % dividend yield.
So the conclusion is that the markets are not running on economic growth, but on liquidity provided by the government.
" Take the 8 % second quarter growth which grabbed most of the headlines. Less conspicous was that exports in June actually declined by 21.2 % year on year while first half exports declined by 20%. These lesser known figures beg the question: Where did the growth come from.?"
Creative accounting plays a big part in creating the impression of rubust growth.
DBS referred to the China markets's high valuations, which it described as unsustainable. According to Bloomburg, the Shanghai composite sells for 31 times earnings and is supported by a paltry 1.4 % divident yield.
The Shenzhen composite figures are much worse.
67 times earnings supported by 0.7 % dividend yield.
So the conclusion is that the markets are not running on economic growth, but on liquidity provided by the government.
