Updated: The Shanghai Composite Versus The Bubble-Era Nasdaq Of 2000

|
Includes: CHN, CN, CXSE, FCA, FXI, FXP, GCH, GXC, JFC, MCHI, PGJ, QQQ, TDF, XPP, YANG, YAO, YINN, YXI
by: Don't Quit Your Day Job

A few months back, we posted our last update on a curious trend: the old being new again, and Shanghai Composite looking a little too much like the 2000-era Nasdaq post-Technology bubble.

At first, the comparison held up well. Now, we have to admit - the Nasdaq's fall was tame compared to what's happened in the Shanghai Composite so far (so far being through Friday's close). 130 days since the peak, the Shanghai Composite is down 38.32%. The Nasdaq was "only" down 22.48%.

A Quicker Decline on the Shanghai Composite

Click to enlarge

For both, we start counting 251 trading days before the peak - the peak being 6/12/2015 for the Shanghai Composite and 3/10/2000 for the Nasdaq. We're 130 trading days past the peak for the Shanghai Composite. (Counting, of course, days when the market was only open for a few minutes before hitting the 7% drop circuit breaker).

Now, obviously, it's not a perfect comparison we're dealing with here - just a general demonstration of some stratospheric valuations coming closer to earth - or at least the troposphere.

If you do this, it's a reasonable comparison. Here's how the Nasdaq looked for the three years after the peak:

Click to enlarge

(Source: Yahoo Finance)

(For scale, January 2, 2001 would be 298 trading days to drop roughly 50%)

What's Next?

You'll find no shortage of pieces out there on whether there is another shoe to drop in China - and we believe that's probably the case. But it's hard enough keeping tabs on one market, and notoriously difficult to track ones a world away in China - so we'll leave the musing to you folks. Let us know what you think will happen with this comparison over the next couple of hundred trading days!