The China Bull Now Enters the Arena

Like a bull charging into the arena, China's stock market returns to glory, leaving the ashes of its recent collapse in its wake. With great assurance and joy, the Wall Street Journal announces:

China Enters Bull Market

Do we all hear the clarion call? Wonder of wonders, rather than descending into hell, China's market has ascended into heaven. And lest we're left dizzy by the rather sudden turnaround, here the explanation:

China entered a bull market Thursday, a surprising milestone after a volatile summer wiped out trillions in value from mainland equities and rattled global markets.

The Shanghai Composite Index has gained 20.3% since Aug. 26, the bottom of the summer selloff. A bull market is defined as a rise of 20% from a recent low.

Let's set aside for a moment the "bull market is defined as a rise of 20% from a recent low." (Who says?) As we pointed out on Monday, the fun has begun with China. We were expecting more exhilaration and chest-thumping. Now we've got it. Forget about the 40% fall in values negatively effecting the Chinese economy. China's government has triumphed again. Skeptics that we were, we last Monday questioned their latest lowering of interest rates, the sixth in a series:

So #6 will be the charm? It'll not only cause the stock market to rise (which it might), but it will prove to be a tonic for the Chinese economy, which is simply hitting a few bumps on the road to prosperity.

Yes, the economy of China will be next in line for praise and glory. We should expect to soon hear the blaring trumpets of the China bulls, now come out of their foxholes. Yes, blow hard and long. You who thought China was facing a growing credit crunch, who doubted the veracity of Chinese government GDP statistics, who claimed China's best days were behind her: You fools!

Indeed, those who lost the bulk of their investment wealth in the recent crash appear to be back for more:

“There is a feeling that people don’t want to miss out on buying at the bottom,” said Steven Wang, a research director at brokerage Reorient Group.

Ah so, buy low. These fledgling Chinese investors have learned quickly. And so they begin piling in for more fun. Of course, they haven't hit the next stop in the stock markets price volatility. That's where all those individual investors get caught holding the bag. Of course, how would they know? This is their first go-round. It's still a game. As we said, the fun has begun.

As for the future of this raging bull, having charged into the arena it must now face the toreador. Let's see how that goes.