After amazing growth in 2007 Chinese stock market has been among the biggest decliners in 2008. Chinese index SSE Composite is down around 50% since the beginning of the year.

Based on P/E valuation China seems to be cheap. P/E ratio has gone down from threatening 50 (a year ago) to current 20. Average earnings growth for Chinese companies remains strong and is on average 30%. Quotient of P/E and earnings makes interesting valuation (PEG ratio is 0,67).

Chinese economy isn’t so much dependent on export as others. Share of export on total GDP is only 38%. It makes relatively safe peer in case of global slowdown.

Next factor is Chinese currency which is undervalued against USD and in future we can expect more and more tension for bigger liberalization.

The point to be considered are interest rates. Endless rates hiking doesn’t pull rates for deposits which are artificially kept low. That’s why there …

In this environment, unlike most of the past 2 months we have to pick spots and assume our purchases (as we layer in) will lose money in the near term. This is different than when we buy a pullback in a market that is generally in an uptrend (mid March to late May) - where when you make a purchase on a pullback, you expect a quick bounce. So with that in mind, I am continuing to rebuild a position in DryShips (DRYS), the dry bulk shipper (with deep sea drilling thrown in); but not expecting any sustained move up in the near term. But my first buy target has been reached, so I am executing a purchase.Now, as the rest of Wall Street joins my thesis (eventually) of a global slowdown these stocks could take it on the chin from a perception point ...

This is the latest prediction for GDP growth from International Monetary Fund IMF. You can see world economic outlook for 2008 and 2009. Numbers are released on April. Middle East and Africa seems to be averse to global slowdown. At least in view of IMF.http://stockweb.blogspot.com/atom.xml