Tuesday, January 18, 2011

THE SHANGHAI COMPOSITE CONTINUES ITS STEADY DESCENT

Investors in mainland China are clearly expressing concerns over inflation and slowing growth that the USA and much of the rest of the world is comfortable ignoring for now. The Shanghai Composite fell -3% on Monday to close almost -16% off its November highs. Investors are increasingly concerned over the government’s ability to contain inflation and steer the economy towards a soft landing.

The Shanghai composite has served as a reliable leading indicator of both commodities and equity prices over the course of the last 5+ years. US equity futures are trading down marginally on the news, however, exchanges are closed for trading on Monday.

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