Complete Intelligence


Is China’s Market a Falling Knife

Everyone’s China’s market expert in the wake of the recent dramatic fall of Shanghai’s equity index. Everyone.


Despite the fact that the Shanghai Composite Index is up 72% from a year ago and is up 16% year to date — making this the third-best performing market globally — everyone knows China’s markets are a one-way bet. Short them. The market is stretched, and the Chinese government is panicking to prop it up. And everyone suspects the Chinese government can’t possibly know what it’s doing through its equity market meddling.


This, despite the fact that the Chinese government has brought more people out of poverty over the last 30 years than any organization — government or otherwise — in the history of mankind.


Perhaps that is precisely why the Chinese government is meddling in the market. They, like the U.S. Treasury Department and Federal Reserve in 2008, do not want to see small investors lose their savings and want to avoid systemic shocks.