Wednesday, November 28, 2012

This is Starting to Get Serious: Shanghai Index Sets Another New Low

From FT Alphaville:

China’s woeful stockmarket
Lately it seems like no amount of happy newsflow about the latest Greek reprieve or positive US data can lift the Shanghai Composite:

Shanghai Composite 5-year chart - FT

Yesterday it fell below the psychologically important 2,000 level, a four-year-low, and today it continued to fall, closing 0.9 per cent lower at 1973.5.

The longer run is no better, as FT beyondbrics showed last week: the Shanghai Composite barely outpaced the S&P500 in the past decade, and is far behind the Hang Seng or the MSCI Emerging Markets index. Moreover, IPOs have fallen to 2008 levels after surging in 2010. The Oriental Morning Post (via Chinascope) reported last week that the country’s securities regulator had held no meetings to review IPOs for more than five weeks, and had only reviewed two IPO applications since the beginning of the quarter.
Where will it all end?

We’ve seen various theories about the moribund state of China’s mainland stockmarket; from the development of Chinese bond markets providing an alternative finance source, to poor corporate profitability, to uncertainty around the once-in-a-decade power transition that took place this month....MORE
From yesterday's "Uh Oh... Shanghai Stock Exchange Index Closes at a Four Year Low":
It's hard to see how the rest of the world's markets can power ahead without China....