Chinese Markets Take Biggest Drop in 10 Years

This morning in Chinese trading, stocks took their worst fall in 10 years over investor concerns the Chinese government may begin cracking down on illegal investments that have helped fuel record-breaking gains in its indexes. The Shanghai and Shenzhen 300 Index fell 9.2%, giving back most of its 13% gains it had amassed over the previous six sessions when it climbed 13% and closed yesterday at record highs. The State Council, China's highest ruling body, yesterday appointed a task force to crack down on illegal share offerings and give guidance on securities regulations and policies. On Feb. 6, Cheng Siwei, vice chairman of the National People's Congress, wrote in a commentary that the government must pay attention to "bubbles" in its stock market before they get out of hand. "People are worried that more tightening measures may come out," said Mona Chung of Daiwa Asset Management Ltd. in Hong Kong. The National People's Congress' annual session begins March 5.

Sources: Bloomberg, MarketWatch
Commentary: Stumbling Blocks On China’s Path To Power • Chinese Blue Chips Soar to the Stratosphere • Profiting From China's Population Policy
Stocks/ETFs to watch: iShares Trust FTSE-Xinhua China 25 Index Fund (FXI), PowerShares Golden Dragon Halter USX China Portfolio (PGJ)

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Comments

[john gaats:]

Looks that the reason behind the Shanghai drop was that investors were concerned about a heavy handed government. However, the way we read it here is that China's economy is heading for a slow down. If it is so, we are speculating based rumors. B.T.W., do you think Greenspan smells something or he is also speculating now that he is not the Fed Chairman.

2007 Feb 27 10:59 AM

[Ray Lopez:]

Greenspan knows, he knows, he KNOWS! He's a gnome pulling the strings behind the curtain, the marionette extraordinaire! All power flows through his fingertips.... look out below! Like they say in haunted house horror hlicks--GET OUT NOW!

2007 Feb 27 05:29 PM