China Crisis Watch (3)

Image via WikipediaToday the Shanghai stock exchange for the first time in weeks behaved like I knew it. Making sense out of the irrational rollerskating movements at China's leading stock market was almost impossible. Government actions, new financial figures, drastic development outside the markets: the movements of the Shanghai Index had its own mechanisms. And of course, the Shanghai market did in now way follow the global trends.
Although, that was not fully the case. It might have been a kind of psychological need for identifying trends on my side, but every time when the global markets went down, the Shanghai index went up. And when the global markets went up, Shanghai went down. It was a comforting kind of illusion, suggesting there was a system to be found, even for the irrational Shanghai stock exchange.
Unfortunately, the latest crisis Shanghai seemed to follow the global trends, or should I say, the global exchanges followed the unpredictable Shanghai course, with even less relation to reality than in the past. Of course, the Shanghai downturn had already started at the beginning of this year, so when the global markets followed, it might have looked like Shanghai was acting in sync, but that was only an illusion foreign analysts joyfully accepted.
Yesterday, as the global markets went up after an almost unprecedented downturn, Shanghai seemed to follow. Brokers worldwide cheered, for one day the Shanghai stock exchange followed a global trend. "A-shares higher on global rally", media cheerleaders jelled wrongly.
Today, that aberration was fortunately over. While the global stock market followed their way upward, Shanghai did its own thing. It went down. That is a pity for the shareholders in Shanghai, but at least my system is working again: Shanghai goes against the trend.

Links
China Daily: Chinese firms tightening belts
China Car Times: China Car Sales Down in September
Financial Times: US crisis freezes China sovereign funds
James Fallows: More on credit crises and financial indices
Market Watch: China's crude-oil imports up about 10% in September on year

Commercial
Making sense out of China business, finance and economy is an art in itselfWilliam Bao Bean
Fons1 via Flickr. At the China Speakers Bureau we can provide you with leading speakers on those issues. If you need them at your board meeting, conference or panel, do let us know.

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