Shanghai Index Down 65 Percent In 2008

The Shanghai Composite, which measures the combined share value of most of the large public companies in China, fell 65% this year. Among the major US indices, the sharpest drop was the 39% plunge in the Nasdaq. The Dow Jones Financial Index, which should have done as badly as any stock measurement in the world, was off 55%.

One of the most popular adages on Wall St. is that stock markets trade based on what investors think will happen to the economy and corporate earnings looking out into the future by six months. If that is true, the movement in the Shanghai Composite is ominous. It has dropped 20% in the last 90 days. Over that period, the DJIA is down only 12%.

Read the whole story here.

Comments

[leeman79]

Good. Maybe they'll abandon the free market and go back to isolationism.

[mamacat]

Someone talk me down if I am wrong, but I seem to recall that after the market crash and panic of 1929, we had the rise of dictatorial, imperial governments in Germany, Italy, and Japan. Eventually, we had World War II.

I think there are very real threats to world stability in a complete financial collapse. Whatever it takes, this mess needs to be fixed, before it gets worse.

[kapo]

I see a major problem ahead. Most people seem to believe the government Chinese has a huge stimulus package to boost local demand. In fact a major component in their plan is to spend to further increase their export competitiveness. They are also devaluing the yuan for that purpose. That is why China's exports have fallen, but by less than its competitors such as India. They see this as a game and they plan to come out as winners. It will only work however, if they can convince their people to bear some pretty harsh punishment in terms of income cuts and unemployment. If they succeed, China will secure its control of a huge swathe of global manufacturing, laying the basis for their accelerated emergence as global leaders. If they fail, China will go through another of its cycles of civil strife with the possible exit of the communist party monopoly. If the latter unfolds, you may not have to take Chinese classes, but your kid probably will anyway.

[themodernleader]

Have you all considered why the American Stock Market is down only 34% for 2008 while the Shanghei Indez is down over 50%. And other indexes are in the same level of decline.
I don't know. But paranoia may be warranted here. We have had the greatest decline in value, unemployment, sound corporations--banks and manufactures-- personal wealth, public treasuries and so on, in the industrialized world. So what's up?
Could it be possible that the Federal Reserve and the U.S. Treasurer at the behest of the Pesident is regularly throwing hundreds of billions into the Market to keep it afloat? Bush has regularly stated that the Market's health determined the popularity of his Administration. He early instructed his subordinates to do everything in their power to raise the value of the Stock Market.
When Obama comes to Office, he is going to uncover some practices that would shock even the most cynical and futilitarian of our citizens. Spiking the Stock Market may be one of those practices.

[Maschine]

Let me see if i understand this.

China only blossomed becasue it was able to supply goods to countries by using cheap labor.

Thoise countries that used cheap labor as a tool in their corporate arsenal quickly shut down workforces in their middle class countries. Ok now it gets interesting.

Same said countries now began importing cheap goods to replace domestic goods and their middle class lost tons of jobs. Where does the money come from ? Well its created out of thin air.

So, where do we stand. The consuming countries are imploding. China has no one to sell goodsa to let alone their own "middle class" which is itself going to feel the real hammer of economy 101.....no demand, supply reguirements go down, businesses close, people g3t laid off, same people stop buying.

SO what must China do, fins a slave nation to make cheap goods for itself, print paper, and develop a false economy....just like their clients did.

[shanghaislim]

OUCH......................................from my bunker in downtown Shanghai!!!!!!!

But all in all, seem to be doing better than my kinfolk in California!!!!

[pydbl]

Really? I guess you just don't know enough people in California lol

[LeeCalif]

I wish it was only going to be a year.

The bush depression will be at least 10 years.

[rkimball]

it will get worse for china as the world economy worsens. they can no longer rely on exports if the whole world is broke.

[MetalCanuck]

Thats true but China also has all the productive capacity to come back because we gave it to them. WE don't so in the long run WE are in the most trouble.

[shanghaislim]

Well Said. China is resilient and has learned from other capitalist models what to do and what not to do. Bill Gates said that China has built a new form of capitalism that the world better keep up with or succumb?