Global press is busy about Greece default but real story is unfolding in China. Chinese Govt totally disturbed and confused on how to deal with stock market situation. Everything was going great for Chinese market and it looked unstoppable just 4 weeks back...and then came the decision of MSCI. There was widespread expectation that MSCI would add China A shares into MSCI Emerging market index but MSCI refused to make changes on grounds of market access. That seems to have acted as a trigger. What happened afterwards: Truly dramatic fall.
Here's Shanghai composite index daily chart
What started as an orderly correction, suddenly became unruly and panicky. Chinese Govt also panicked...and started doing all it can to restore confidence but nothing seems to have worked so far
Chinese stocks declined 5% more on Friday (not reflected in the chart above) on news of Chinese Govt launching full criminal investigation on current market decline. The drama right now looks like one is watching a movie in action with Chinese Govt acting as pilot in the movie below trying to save the flight. Please watch the video below.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers