As we have been noting all year, Chinese stocks remain in the midst of a cyclical downturn, last night closing below the psychological 2,000 level at 1991, down 10% year to date–the lowest close since October 2008 and just 15% above the ultimate cycle low of 1723 on October 27, 2008.
Source: CNBC.com
Meanwhile most other developed world stock markets are so far still whistling past the graveyard with unrealistic growth hopes dependent on miraculous political gimmicks rather than pricing realistic demand in a post-credit bubble, de-leveraging global economy.
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The Shanghai Comp is now back to levels it was at in the year 2000. And that’s in nominal terms. In real terms of course, it’s lower. That’s quite extraordinary when you consider all of the real growth in the Chinese economy over the past 12 years. While this sort of move in stock markets is certainly not unprecedented, it speaks volumes about Danielle’s point about knowing what type of secular and cyclical markets we are in and adjusting your risks and asset allocations accordingly.
Does this chart not look like the NASDAQ of 2000?