Shanghai Stock Exchange: Worst Performer of 2005

China's Shanghai Stock Exchange has been the worst performer in 2005, down -12.7% over the past 52 weeks. Yet China's economy is booming at a 9.5% clip, and has moved from the seventh to the world's fourth largest economy this year. China's M2 money supply is a whopping 18% higher from a year ago, as foreign money flows into an undervalued yuan. Retail sales are 13% higher from a year ago. So countries with stronger economies have relatively weaker stock markets, and countries with anemic growth have robust equity markets. In the case of Shanghai however, the Chinese government owns two-thirds of the outstanding stock on the $400 billion exchange, and prices are depressed awaiting a big floatation of secondary shares.

Shanghai Composite

Editor's Note: US Investors interested in investing in China can do so via ETFs FXI and PGJ and CEF JFC