Shanghai: World Leader to World Laggard

What a difference a few days makes. It wasn't long ago that China's Shanghai Composite was sporting triple-digit gains for the year, and investors were wondering how high it would go. But today the main question is when will the selling stop? In a span of only ten days, the Shanghai Composite has lost 17.5% of its value, bringing the index dangerously close to the technical threshold for a bear market (-20%). Given that many were relying on China to help lead us out of the economic recession, the action in China's stock market is helping US equities start the week off on a notably bad note.

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Comments

[Joseph L. S...:]

Actually, I fear it may still be a "leader" -- regrettably, to the downside.

Chinese investors are realizing that decoupling is a myth. They are seeing the early numbers of decreased Chinese exports and taking yuan off the table.

If this is a leading indicator, it will affect perceptions worldwide, particularly among those who predicted the Chinese powerhouse would pull the rest of the world out of the doldrums.

Aug 17 11:24 AM

[don2m:]

If this chart was a GE or CAT or any other major US equity the report would have been directed at the fact that "it has gotten ahead of itself" and is taking a breather, i.e. correction.
From a trading standpoint it is doing exactly what is expected and the longer term still looks good.
1.3 billion people are not going away and most of them are looking up not down. China can very well replace the US as the leading economy of the world as the moves they have made to date seem to be positive towards that end. We will see. One thing is for sure,our economy is so fragile that it is almost in the toilet and getting more fragile by the minute. Bank failures have just begun and the FDIC is getting strapped. There is a whole world out there making financial adjustments none of which approach the absurdity
of what we are doing here.
I will bet on the rise of the China economy now before I'll bet on the successful outcome of what we are doing here.

Aug 17 12:25 PM

[Alphameister:]

"World Laggard" after a correction (in a notoriously volatile market) that is very modest relative to the preceding advance? Ludicrous!This is NOT a bubble bursting, but rather another good buying opportunity in the international market best positioned to provide superior growth over the long term.

Aug 18 09:30 AM