The Shanghai Composite closed down 0.38 per cent on Monday, to a three-year low. This came after rise in Chinese home prices caused investors to speculate that Beijing would announce more property curbs to maintain a “firm grip” on its real estate market.
Moreover, a newspaper run by the People’s Bank of China said the central bank does not intend to cut reserve requirement ratios (RRR) in the near-term. This also disappointed markets that were looking for more interest rate and RRR cuts and easing following disappointing economic data.
In fact, the Shanghai Composite has diverged vastly from the S&P500. Global Macro Monitor points out “the Shanghai is down 39.2 per cent from its post crash high while the S&P500 is up 42.3 per cent over the same period”.
More from Global Macro Monitor:
What does the continued poor performance of the Shanghai signal? Not sure, but either Chinese stocks are holding a massive fire sale and the Shanghai is setting up for a huge bounce or Air China is crash landing. And that, folks, ain’t good.
Photo: Global Macro Monitor