Chinese Market Plunges

Uh-oh. Just earlier this week there was a monster IPO in Shanghai, and yesterday all we kept hearing about on TV was how the recession was officially old news in China.

And then today, this:

Guardian: The benchmark Shanghai composite index was down by as much as 7.7% in afternoon trading, despite huge interest in the flotation of China’s biggest housebuilder. The index eventually closed down 5% at 3266 points, its biggest daily decline this year.

Before today’s falls the Shanghai market had risen by 81% this year, staging a strong recovery following its plunge during 2008. This has prompted speculation that China’s banks might curtail lending to prevent another unsustainable bull market. Read the whole thing >

Also hinting a return to investor nervousness were strong overnight moves in the Dollar and the Yen, as well as a selloff in commodities.

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