Be very careful with Chinese stocks..look else where in the world for 2008

The U.S. holiday is keeping the world quiet for today. Clearly, the U.S. market is still the engine for global economy, for now. "The reality is, there's only one market that moves the others along," said Stuart Eaves, a Wellington-based broker at Waddell Johnston McCarthy.

However, Chinese stocks are red hot...maybe too hot. Chinese stocks touched a record while Japanese stocks declined in Monday trading.

In Europe, the U.K. FTSE 100 index inched up 0.19 percent while the German DAX 30 index advanced 0.14 percent. But the French CAC-40 share index ended 0.2 percent lower.

Both France's Gaz de France and utility Suez SA turned back from early gains to trade lower after announcing new terms for their long-awaited deal to combine the companies.

Gaz de France shares slid 2.7 percent, while Suez shares lost 3.3 percent.
The pan-European Dow Jones Stoxx 600 index ended 0.3 percent higher at 377.01.

In Asia, Japan's benchmark Nikkei 225 Index stock index closed slightly lower Monday, down 0.27 percent.

The market was dragged lower by the resignation of the minister of agriculture and by government data showing capital expenditure by Japanese companies fell in the spring quarter for the first time in four years.

In China, the Shanghai Composite Index gained 2 percent to close above 5,300 for the first time, as airlines surged on news of a deal involving China Eastern Airlines, Singapore Airlines and Temasek Holdings. Elsewhere in Asia, Hong Kong shares dipped 0.3 percent, weighed down by profit-taking and expectations of a delay in a program allowing Chinese. Chinese stocks are now officially trading beyond any P/E multiples that is considered "normal". If investors remember what happened in 2001 with the Nazdaq. And remembers what happened to Mortgage companies earlier this summer - It's time to take your profit in China and invest in other parts of the world.

I expect that Chinese government will do everything they can in their power to prop up the market past 2008 Olympics. After that, everyone will be on their own. After all, China is a totalitarian state. It would be a safer bet to cash out while they are doing everything they can to keep their stock market going, then to be greedy and invest in an overheated market. Investors should take profit now and invest in South East Asian markets, as well as Africa will growth would be strong well past 2008. Think about it.