Shanghai 3000, 4000, 5000, 6000 just a memory

We didn’t cover Shanghai 3000, but we did note Shanghai 4000, Shanghai 5000, and Shanghai 6000. Now it’s Shanghai 2605, and the amazing thing is that all the previous records were made, and erased, in little more than a year and a half. WSJ

Chinese stocks slumped Friday to their lowest point in well over a year, finding little support ahead of the Beijing Olympics opening ceremony, as concerns about a slowing economy weighed down property developers and airlines.

The benchmark Shanghai Composite index, which tracks both the yuan-denominated Class A shares as well as Class B shares priced in foreign currency, slumped 4.5% to 2605.72, its lowest close since Dec. 26, 2006. It is down 57% from its record close in October. The All Share index in Shenzhen tumbled 5.6% to 747.34, its lowest close since March 6, 2007. Friday’s drop came on worries that the Chinese economy could slow further after the Olympics.

Markets forecast the future, and the market’s predictions for the Chinese economy have gotten worse and worse in the last year. So many bubbles have now burst, housing, mortgages, and many commodities now including oil. If this is the correction that the IMF predicted was long overdue, it could be a doozy.

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