The Shanghai Index had another massive sell-off this morning, falling by a further 6.7% and making the total loss since August 4th now 23.2%. Chinese analyst Andy Xie was interviewed this morning on Bloomberg Television. He points out that “a lot of people in the stock market have fantasies about China…but the recent recovery is not sustainable.” Watch the interview clip here.
China has enormous longer-term potential but as a still export-led economy, rebalancing the economic model to domestic demand will take at least a few years. Xe sees reason for another 25% correction in Chinese stock prices as the reality of a slow global recovery dampens the recent spate of speculative buying.
The Shanghai's negative price trend suggests the prospects for falling risk appetite in other stock and commodity markets around the world.
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