This is becoming as monotonous as it is becoming predictable. Once again we have a big of a slip in the market and it is blamed upon action in our Northern neighbour. To me the issue is simple, only simpletons believe that China will be the saviour of Australia and for that matter the rest of the world. Whilst this might seem like an outrageously bod claim and bordering on prediction it comes from a simple observation – the Shanghai Composite index is rooted and until it is unrooted my opinion will not change.
There is a simple fact in markets that many ignore – markets are future pricing mechanisms and the Shanghai Composite is saying that there is nothing positive about China as a potential investment vehicle and by extension its role as the saviour of the known world. This may change tomorrow, it may not, but whilst their index is starting to resemble the Nikkei I wont hold my breath.
For those of a more fundamental bias I have dropped in a US 60 Minutes piece below.