Monday, July 6, 2015

Economic Summary for the week ended 6th July 2015

In recent weeks the Chinese stock market has hit the headlines for all the wrong reasons. Major indices have fallen significantly, with the shanghai composite, for example, is now down over 20% from its recent peak. Such was the scale of the run up, key indices of Chinese equities remain up by double since the start of the year. But where to now? Although there were pauses on the way up, history suggests that now the tide has turned, further downside awaits. This latest evolution in share prices bears a striking resemblance to the rally in Chinese equities that started in 2007 and lasted throughout that year. The similarities are so great that the correlation between the two series is almost prefect. Buyer beware.   

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