The Great Leap Downward

From Newsweek:

China may be the world’s fastest-growing major economy, but its main stock market has fallen on hard times. Since peaking last October, shares on the Shanghai Stock Exchange have lost half their value—an ignominious tumble capped when prices plummeted 7.7 percent on Tuesday. By the close of trading the Shanghai Composite Index (the broadest measure of all shares traded on the exchange) stood at 3,073, down from a peak of 6,124 last Oct. 16. “The environment is highly uncertain,” says Vincent Chan, chief equity strategist at Credit Suisse in Hong Kong. “The market is looking at the emergence of slower growth and higher inflation globally.”

China’s bear market was not wholly unexpected. In the first nine months of 2007 share prices in Shanghai shot up 1.7 times, prompting financial luminaries like American Warren Buffett and Hong Kong tycoon Li Ka-shing to warn that a dangerous correction was brewing. China’s main exchange ranked second in market capitalization behind Tokyo, and fifth globally. And after hugely successful listings, previously unheralded state behemoths like PetroChina, the Industrial and Commercial Bank of China and Air China emerged as some of the most valuable companies in the world in their respective industries.

Read also Inflation Fears Sink Chinese Shares by Frederik Balfour.

June 10, 2008 6:53 PM
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Categories: Economy