Shanghai Composite Breaking a Six-Year Low Tonight

[HenryTo]

Not just a 52-week low, folks - we're talking about a six-year low! The Shanghai Composite hasn't been this low since early 1999:

http://finance.yahoo.com/q/bc?s=%5ESSEC&t=my&l=on&z=m&q=l&c=

[HenryTo]

Duncan,

From speaking to people who know about the Chinese stock market, I get the sense that the Chinese stock market mostly consists of very speculative companies - and people who trade those stocks are mostly doing it for speculative purposes. i.e. the performance of the various Chinese indices doesn't have to reflect the performance of the Chinese economy.

The better companies are listed either in the U.S. or in Hong Kong. These companies have stronger balance sheets and have much better disclosure procedures. Note that the Chinese ADRs have performed significantly better as a group than the Shanghai Composite over the last few years.

I will try to find out more about this.

Henry

[dash]

Henry,

I find it puzzling that while the Chinese economy grows at 8-9% pa their stockmarket, as you point out, continues to make new lows. Do you have an explanation for this? Thanks for your thoughts.

Duncan