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Asia Minute: Greece Only Part of the Picture for China’s Stock Market

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The money troubles of Greece are dominating business news headlines around the world. They’re also the primary focus for many financial markets. But in Asia, there’s one notable exception. HPR’s Bill Dorman has more in today’s Asia Minute.

The Shanghai Composite Index closed trading Monday in bear market territory.

That means its fallen twenty percent from its peak—which it reached only on June 12th.

Even a surprise weekend rate cut by China’s central bank didn’t help.

Still, the index is nearly DOUBLE its level of a year ago.

That’s China…where the stock market had been on a tear until a couple of weeks ago--trading on themes largely disconnected from the ones dominating other global markets.

In China, domestic concerns not only take precedence, they can squeeze out events dominating markets elsewhere.

The domestic issues range from how the central government manages a slowing economy to the level of debt investors are taking on to buy stocks on margin.

Only about 2% of China’s stock market is owned by foreigners…compared to 16% for the U-S stock market…and nearly a third for Japan’s.

As for what those international investors do from here, Morgan Stanley sent out a note last week advising investors NOT to buy the dips in China’s market.

A cheerier view comes from the state-run China Securities Journal…which ran an editorial Monday headlined “China’s Stock Market is Facing a Thirty Year Golden Age.”

Even if that’s true….it’s certain to come with some volatility along the way.

Bill Dorman has been the news director at Hawaiʻi Public Radio since 2011.
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