Shanghai is down 5.8% this morning. After almost doubling since the beginning of the year and the Chinese Shanghai Composite Index has now declined by 12.2% since its peak of August 4. Technically, it looks if more downside is in store for the Shanghai Composite Index and it would not come as a surprise if lower Chinese equities serve as the catalyst for a well-deserved pullback in global stock markets. Some think that we are seeing no more than the first reversion to the mean within this bull market. After such a rally, it is normal and healthy to see some pull back.
I will be watching closely but for now, it feels like we going through a normal short-term correction. China should have world-leading increases in corporate profits next year. So, for now, we are not the least bit concerned. Stay tuned!