Chinese stocks have entered official bear market territory. The Shanghai Composite Index retreated 1.9 percent on Tuesday, bringing it 21 percent below its Nov. 23 high. Fears that officials will have to raise interest rates to cool inflation have been weighing on Chinese shares.
Those fears intensified yesterday after the annual inflation rate pushed up to an 18-month high in April and property prices rose at a record clip.
“The Chinese economy will slow down considerably,” investor Marc Faber, publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview. The government is “trying to cool speculation.”
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China’s Bear Market Stocks to Rebound, Templeton Says
China’s Shanghai Composite Index, the first of the 10 biggest benchmark measures to enter a bear market this year, will rebound as a surge in exports lowers the risk of a slump in economic growth, according to Franklin Templeton’s local fund management unit.
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