Shanghai’s stock market has tumbled again losing 8.3% on Monday. Two hundred and fifty billion euros has been wiped off the share values there since the Chinese government put up the cost of trading shares last week to cool a market that has nearly tripled in value in the past year.
But Jing Ulrich, heads of Chinese equities at JP Morgan is not worried: “The real economy is growing very strongly, in fact we are expecting 10% plus GDP growth in 2007, corporate earnings growth is very strong, so I think a correction in the stock market is healthy. It’s not going to impact the economy very much.”
Many of those selling shares as prices slide are unsophisticated new investors hoping to get rich quick and leap in to the ranks of China wealthy, the target audience for the Millionaire Fair, an exhibition of luxury goods including such items as diamond encrusted mobile phone costing 2.5 million euros.
One Chinese businessman summed it up: “The market is pretty good here, the trend is for more and more people buying luxury goods. There is already quite a number of rich people in China.”
Indeed there are at least 250 millionaire households in the country and the luxury goods market there is growing at an annual rate of 10% to 20%.