Earlier today China’s Shanghai Composite index fell heavily, again, after dropping more than 6.5% on Thursday.
It’s been an epic selloff, and one, according to this data, that is history-making.
From Thursday’s high of 4986.5 to Friday’s low of 4431.6, the index fell 11.1%. Not only does this mark a ‘technical correction’ — a decline of 10% — it is also the largest two-day decline from the previous sessions high to the following day’s low since January 22, 2008.
On that day, at its lowest point, the index fell 13.2%.
While it has been a long time since a decline of this scale has occurred in such a short period of time, the parallels between the selloff then to that seen today are uncanny to say the least.
Only days before the index recorded that two-day decline it had been on an amazing run.
From the start of 2007 to January 14, 2008 it had put on 106%. An incredible gain in such a short period of time, and one that is a near carbon copy to that seen on the Shanghai Composite over the past year.
Both just over a year in duration. Both with gains in excess of 100%.
From the close of January 22, 2008 — 4,560 — the Shanghai Composite subsequently slumped 60% in just 11 months, eventually closing the year at 1,820.
Is history about to repeat itself yet again?
That’s the question many are asking themselves today.
At its mid-session break the Shanghai Composite is trading up 0.12%, reversing a decline of more than 4% earlier in the session. Elsewhere the Shenzhen 300 index is up 0.61% while the Shenzhen Composite, having doubled this year, has added an additional 1.04%.