Shanghai to fall further declares guru

Shanghai is up 3.23% after reopening today but that disappointed the fruit loops driving the dead cat and shares have slowed. Meanwhile, from Bloomie:

Volatility in the world’s wildest stock market is finally receding. If that’s one argument for buying Chinese shares, Bocom International Holdings Co.’s Hao Hong has a long list of reasons why you shouldn’t.

…After distinguishing himself as one of the few forecasters to predict both the start and peak of China’s equity boom, Hong is once again breaking ranks with peers as mainland markets resume trading after a week-long holiday. He says the Shanghai Composite needs to fall 18 percent to 2,500 before it’s cheap enough to buy, while the average estimate from eight other strategists compiled by Bloomberg implies a 12 percent rally by year-end.

“I still think it’s better to sell into highs rather than buying dips,” Hong, the chief China strategist at Bocom in Hong Kong, said in an e-mail interview. “The government has succeeded in curbing market volatility. But volume is dying, too.”

Absurd! A bunch of sell-siders applying their Western spruik to a communist casino that has zero connection with reality. If ever there was an illustration of investment bank obtuseness this is it. Or perhaps this is:

*CSI300 INDEX 12-MO. TARGET CUT TO 4,000 VS 5,000 AT GOLDMAN

‘Reform’ and ‘liquidity’ continue to buttress our constructive strategic market view. Our refreshed 12m CSI300 target is 4,000 (from 5,000), 25% upside, comprising 10% EPS accrual and a liquidity-based target P/E of 12.7X (-0.4 s.d.), but a harsher growth backdrop could see another 8% downside from current levels. Implementation of SOE and other structural reforms, and the 13th Five Year Plan (FYP) are the key issues to watch.

Goldman has downgraded Shanghai to 4,000 points. Hello?

Anyway, with any luck Shanghai will roll lower in short order. It will be amusing watching the dead cat deal with that.