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Former Federal Reserve Chairman Alan Greenspan told a conference in Madrid by satellite that he thinks Chinese stocks might undergo a "dramatic correction," calling the rise in equities "clearly unsustainable." His comments pushed U.S. stocks into negative territory erasing earlier gains. Indices went on to trade lower across Asia, including a 0.54% loss in Shanghai. Shanghai-Composite-chart-05-23-07 Nouriel Roubini, chairman of Roubini Global Economics LLC in New York, made similar comments, saying, "The Chinese have lost control of monetary policy and now it has reached the stock markets. There's a bubble, and eventually it's going to collapse." In recent weeks Goldman Sachs analysts, Li Ka-shing (the richest man in Asia and a closely watched investor) and the Governor of the People's Bank of China, have all made public comments about concerns over a Chinese stock bubble. Despite Greenspan's negative outlook for China, he said he is not worried about the overall global financial system.

Sources: Bloomberg, MarketWatch
Commentary: Greenspan: "China's Market Good For At Least Another 2000 Points"Is the Chinese Market Heading Towards a Bubble or Solid Fast Expansion?Goldman Warns China Correction Possible
Stocks/ETFs to watch: iShares FTSE/Xinhua China 25 Index (FXI), PowerShares Gld Drg Haltr USX China (PGJ), The China Fund (CHN), The Greater China Fund (GCH), JF China Region Fund (JFC), First Trust ISE ChIndia Index Fund (FNI)

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Source: Greenspan Warns of 'Dramatic Contraction' in Chinese Stocks, Moves Markets