An interesting phenomenom at play right now.If one views the...

An interesting phenomenom at play right now.

If one views the Lithium price and the Iron ore price, we can clearly see that fundamentally the market is viewing no change in structural story in China.

However, if one were to view Chinese equities you may form the view companeis are going to have rapid earnings growth in the short to medium term.

What I believe has happened is China has engineered a multiple rerate by allowing investors to buy equities at next no cost. The consequence is that the valuations on Western indicies have not changed or are now going backwards. China has created a mini share market frenzy based on nothing other than a bit of free money. It has nowhere else to go other than stocks, so predictability this is what has happened.

Chinese investors now realise that money with a 2% borrowing cost may be cheap, but it still needs to be repaid. So now they are heading for the exits. The chinese love a good gamble.

Ganfengs hedging of its PLS shares look to be just about perfect now.