The Shanghai Composite fell 4.3% today. That’s a pumelling by any standards. This happend for two reasons, both bad.
The Conference Board, which is the New York based research group which monitors the Chinese economy, revised downwards it’s figure for how much the Chinese economy is growing from the 1.7% growth it reported on June 15th down to 0.3%. Which changes the picture of China from growing fastest in13 months to growing slowest since November. This hiccup was due to a ‘calculation error’ apparently.
Apart from the dubiousness of such an error, it says China is NOT growing and is therefore NOT going to save the rest of the world from the second leg of this recession. China’s growth has slowed to almost a stop! It may also mean the US can kiss goodbye its slim hopes of a Yuan re-valuation and any hope of exporting to China.
That was reason one. The seond reason for the Shanghai fall was ABC bank (Agricultral Bank fo China) doing some revising of its own. ABC is, you may remember, about to make the largest IPO in history at £23 Billion. Ag Bank decided today to lower the price of SOME of its shares. Its shares in Hong Kond remain as they were. But shares in Shanghai already much lower than the Hong Kong prices, were lowered. The reason is fear that domestic Chinese demand for the shares might be weak. This is a powerful indicator of what Chinese finance thinks of China’s economy.