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China Entering a Bear Market?

I am not a fervent watcher of the china stock market. i know it went up by alot but this is some news on bloomberg if it says China is entering a bear market. I think its based on crossing 20% as a benchmark level?

By Daniel Hauck

Aug. 19 (Bloomberg) — Chinas stocks dropped, briefly dragging the benchmark index into a so-called bear market and triggering declines in equities and commodities worldwide. The yen and Treasuries rose as investors sought less risky assets.

The MSCI World Index of 23 developed nations sank 0.3 percent at 12:45 p.m. in London and futures on the Standard & Poors 500 Index slid 0.8 percent. Chinas Shanghai Composite Index slumped as much as 5.1 percent, extending its drop from a 2009 high to more than 20 percent, the common definition of a bear market. Copper fell 2.1 percent. The yen strengthened against all 16 of the most-traded currencies tracked by Bloomberg and the pound weakened. The 10-year Treasury yield dropped to its lowest level since July 14.

The U.S. and Chinese governments pledged more than $13 trillion to combat the worst financial crisis since the Great Depression, helping to fuel a nine-month rally in the Shanghai Composite that pushed the indexs price-to-earnings ratio to almost double the valuations for the S&P 500, according to data compiled by Bloomberg. Earnings for Chinese companies that reported since July 8 have trailed analysts estimates by 12 percent on average, Bloomberg data show.

The focus of global markets is whats happening in China, said Bartosz Pawlowski, a London-based emerging-markets strategist at BNP Paribas SA. China will have to remove liquidity from the market, and its likely that commodities will suffer and it means worse sentiment towards risk in general.

[Read the rest of this article at Bloomberg >>]


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