The source of this global bull market and the phenomenon that could be its undoing; China. The Chinese government raised taxes on stock transactions today in order to cool their market. The move sent shares in Shanghai down 7%. Could an Asian financial shock ruin are own bull market and should you steer clear of China trades?
Constance Hunter, an international Hedge Fund Manager at Coronat Capital Management joins the guys to help answer that question.
Hunter says China has put forth a series of initiatives to try and calm their markets. She adds China can only undo the American markets if they get very aggressive with their currency policy. Barring that, she doesn’t see much of a threat.
Dylan reminds the panel that on May 21st Eric Bolling recommended shorting China and the iShares FTSE/Xinhua China 25 Index (FXI). Dylan says Eric’s short term bearishness is on valuations.
Constance Hunter adds she feels the best way to trade China right now is to buy shares of Global Sources (GSOL) and Chindex Int’l (CHDX). She also recommends being long Singapore because there are a lot of people who live in Singapore (as well as Hong Kong and Malaysia) who set up their businesses in Singapre but operate them in China.
Pete Najarian likes Baidu.com (BIDU) and China Mobile (CHL) and recommends going long the puts on these stocks – playing on the idea that China can go higher.
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Trader disclosure: On May 30, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
Najarian Owns (AAPL), (BIIB), (CBH); Bolling Owns (ICE), (NMX), Gold, Silver, Natural Gas, Coffee, Sugar; Bolling Is Short (FXI) And Is Long (FXI) Puts Coronat Capital Management Owns (GSOL)