Shanghai Negative Surprise

Posted by Mark Jasayko, CFA, Portfolio Manager

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McIver Wealth Management Consulting Group / Richardson GMP Limited
Long Periods of No Gains

Whenever the level of the Shanghai Composite Index approaches the current calendar date (2014), I take notice.

Over the last few trading session, it has fallen through this level and closed at 1,991 yesterday.  As illustrated on the accompanying charts, it last traded below 2,000 during June and July of last summer. 

During the depths of the global credit crisis, it fell to 1,706 in late 2008 from a peak of 6,092 in October of 2007.

Another mesmerizing statistic is that yesterday’s close of 1,991 is equal to where the index traded in the summer of 2000, 13 ½ years ago.

So, for investors investing in one of the world’s hottest economic growth spots, an index representing stocks in that economy has gone nowhere since near the turn of the millennium!

The lesson here is that hot economies don’t necessarily mean there will be much return on investment for adventurous investors.


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