Chinese stock exchange took a big drop

The stock exchange in China took a deep turn yesterday around 6:00 pm. At closing we say that the Shanghai exchange had dropped a total of 6,4%.

It is expected that the reason to the drop is the concern related to capital outflows that might take a big stab to the Chinese economy. One of the best forecaster for the Chinese market stated the following.

“The pressure of capital outflows and the yuan’s devaluation is still quite large . We have not seen signs of recovery in the economy thus the first and second quarters can be challenging”, said Dai Ming, at Hengsheng Asset Management

Hung Weimin, who operates a smaller hedgefund named Yourong Fund, had a fantastic 6,200% return last year, says that he thinks that the Shanghai stock exchange could drop another 15% the first 6 months of the year and advices investors to sell their shares. Besides the fact that the Chinese economy is declining, he also refers to the fact that more than 660 new companies will be listed, which will result in that capital will be spread out.

“Volatility in oil prices will not help directly to restoring confidence in the market . It is not easy to enter with new initiatives”, said Robert Levine, responsible for the trading on the Asian market at CLSA.

This is how the Asian markets have performed since 31/12/2015

Index Utv. Kl 8, %
MSCI Asia Apex 50 -2,2 -12,4
Nikkei 225 -2,3 -12,2
Hongkong Hang Seng -2,3 -13,8
Shanghai Composite -6,4 -22,3
Shenzhen Composite -7,1 -25,7
Taiwan Taiex -0,8 -6,1
Sydkorea Kospi -1,2 -4,6
Indien BSE Sensex 30 Stängt -6,2
Singapore Straits -0,8 -11,5
Australia S&P/ASX200 Stängt -5,5