This week global markets took a Shanghai sell-off of stocks in
stride, as the Chinese government attempted to cool the soaring Chinese
stocks and exchange traded funds(ETFs) that hold them. Kirk Shinkle for Investor’s Business Daily
reports China’s Ministry of Finance tripled its transaction charge on
share trading, aka the stamp tax, to 0.3%, previously at 0.1%.This
triggered a 6.5% drop in the Shanghai composite last Wednesday, which
is the second largest one-day decline this year. Selling only spread
mildly in Asia, and U.S. markets opened lower but soon recovered to end
the day still ahead. This resilience is a welcomed change after the
February 27th sell-off. China ETFs were flat for the day. iShares MSCI Xinhua/China 25 Index (FXI) is down 0.2% year-to-date, while PowerShares Golden Dragon Halter USX (PGJ) is up 10%. SPDR S&P China (GXC) began trading mid-March.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.