Party crashers: China's stock markets dive as Games begin

The Olympic spirit apparently couldn't find its way to the Shanghai Stock Exchange: The market celebrated the start of the Games by falling to new bear-market lows today.

So much for the government's attempt last week to jawbone share prices higher -- or at least keep them from falling further -- to avoid embarrassment during the Olympics.

The Shanghai composite index suffered its biggest one-day loss since June 27, tumbling 121.86 points, or 4.5%, to 2,605.72, the lowest since December 2006. That left it down 57% from its record high of 6,092 reached last Oct. 16.

The Shenzhen market also took a pounding today. The composite index there plunged 5.6% to 747.34, also a new bear-market low.

Some investors evidently were betting that the government would announce new market-boosting measures before the Games, Bloomberg reports here. When no new handout materialized, the path of least resistance was down.

Other reports said investors were selling because of fear that the opening ceremonies would be disrupted by a terrorist attack (they weren't).

The Chinese markets' struggles show just how hard it is to revive investors' interest after a bubble bursts. At its peak in October the Shanghai market was up 424% in less than two years.

But then, U.S. investors could tell the Chinese a thing or two about the aftermath of bubbles, couldn't we?

Photo: Would any of you folks like to buy some stocks? The scene in Beijing's National Stadium during the opening ceremony of the Olympic Games Friday. Bernd Thissen/EPA

Comments

[Ellen Hilburn]

Does this mean we'll have to pay more for cheap, plastic Chinese junk so they can regain what they've lost in the market?

[Randy]

Chinese investors don't see stocks as a personal investment. They think they are part of a government plan to distribute wealth to anyone who puts money in the pool. There is almost no comprehension of risk and reward, it's been all reward.
Unfortunately, the investors have used everything from their 'nest egg' to any job related funds they could control, even temporarily. If you think the US mortgage issues are big, wait and see what happens if China holds officials accountable for the money they were supposed to be using for public works projects. A lot of that money was 'borrowed', 'invested', and can't be paid back now.

[John]

SSE has a market capitalization of over $3 trillion U.S. dollars...hardly the stuff of "cheap, plastic Chinese junk."

[Brian Lammin]

Ellen
Its doubtful but I would suggest on behalf of the intelligent half of the World
that the next import from China is the American junk currently in Beijing.
That is of course if you there really do want that intellectually unfortunate
person back.
warmest regards.
xxx

[jessie]

Recently I read carefully an online hot topic of “charter 08” upon which I threw doubt. The leading one is about liberalization of economy. It is known that liberalization of economy is an important feature of US economy. In the eyes of the so-called elites of charter 08, US are their savior. But I have to ask why they brought about the subprime crisis and the financial crisis endangered the whole world since their liberalization of economy is good? Why is the western world all expecting aids from China? And why is the West reflecting on the American economic pattern? It’s a pity that so far the elites are so obsessed with the US free economy that they even called on to reduce the threshold of financial access. We all know that the Americans are long for the reduction earnestly. Will these elites want to help the Americans realize their dream which they cannot get through negotiation by changing China? It really makes me confused.

Recently a newborn ‘Charter 08’ draws much attention from the world. But is it a real charter?
Charter, is supposed to be a national document with constitutional effectiveness, should be based on the basic situation of a country and accordant with the people’s interest, must be coordinated and drafted by the thousands of people instead of several bureaucratic liberators.
The so-called ‘Charter 08’ lacks practical feasibility, though it has some seemingly valuable political perspectives. Apparently its drafters ignored the basic situation and basic contradictions of China’s society. A Charter compiled by some fantastic dreamers, can be expected to benefit the country or the people? Maybe it can only benefit someone’s political propaganda and ambition.

Charter 08 is a bomb, far from panacea
When going deep and touching the essence of the Charter 08, I was appalled to see what it is as its true color was finally revealed off the flowery disguise with their alleged care for the nation and the people. What flooded the document is nothing but undiluted and blind orgies of sentiment, one-sided, untamed and thereby harmful.
Any organic life, including planets and the sun itself, follows certain natural laws in its growth, and no hurry-up is allowed in the normal development of almost all the life forms, plants inclusive, so is it applied to the development of a nation and its democracy.
Given the sweeping victory gained by Barak Obama as the first black president in the U.S history, many cannot help but highly tout the unmatchable U.S democracy. Some are even so carried away by the showcase of the U.S. democracy that they made remarks to preach what ‘a real democracy’ should really mean to the people, as is found in the 4,000-word document. But those who are desperately yelling for freedom and democracy might as well disregard a fact, that even in the U.S, the world’s most powerful democracy, racial discrimination has thus far never uprooted; and many social problems and evils persist till now. Perhaps some accomplishments are always beyond attainment, as social progress in any country is uneven.
But the democratic fruits achieved by the U.S so far are by no means windfalls, but tainted by blood and tears of its forefathers and the following generations. China is an emerging economy, and it will be celebrating its 60th anniversary of the founding of the People’s Republic of China in 2009. Comparatively speaking, China is still a fledgling democracy, yet to grow up to its full size and strength. Maybe it will pay some price for its grow-up, but nothing can hinder its progress in the development, nor rush for growth is welcome.
There is no doubt that China, since its founding in 1949, has made much headway in the democratic construction and is gearing for a more splendid future, in that democracy has taken root among the Chinese people, and their unity as one will provide the fertile soil for democracy to flourish and bear fruits in the ancient civilization.