Saturday, June 25, 2011

Today's M^3 - Shanghai SE B Share Index Rebounds 8% Last Week

This is the 2nd time we'll be referencing the Shanghai B Share Index in our Major Market Move post in the past couple of weeks. The last time was on June 10th when the index experienced a 12% weekly drop. This time the news is more positive; the index was the best performer globally last week, up 8%. Now to paint a complete picture, we have to point out that the index is still having a rough 2011. It's down about 18% from the high back in April and 10% from the beginning of the year.

For those of you not familiar with the B Share Index, it's priced in USD and targeted towards foreign investors. A good portion of the losses this year are due to several accounting scandals, one of the more notorious involving Sino-Forest. I don't have enough visibility into the Chinese Stock markets to figure out why the B share index was disproportionally more affected by these scandals compared to the other Chinese indexes. Perhaps Chinese domestic investors perceive accounting irregularities as just part of the normal course of doing business. Of the Chinese equity indexes we track on PikeFin, the worst performer for 2011 is the ChiNext Price Index at -18.4%.

The ChiNext index is a listing of high growth companies (i.e. high risk) based in Shenzhen. According to this article on Want China Times, it's barely over a year old and is down over 15% since its inception (it hit 986 on opening day 6/1/2010 and the most recent print was 832).

(Click on the images for a larger view.
Click here for the most recent performance of global equity indexes.
Click here for the current chart of the Shanghai B Share Index.)

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