Can China’s stocks and exchange traded funds (ETFs) recover today after falling sharply yesterday?

The iShares FTSE/Xinhua China 25 (FXI) lost 3.7% after some finance companies were downgraded, reports Rob Wherry for Smart Money. The fund is still up 34.8% in the last year, but is down 10.5% in 2008. SPDR S&P China (GXC) also lost some ground today, falling 2.3%. In the last year, it’s up 28.8% and down 13.5% year-to-date.

Stephen Green for the Wall Street Journal Asia says
that clouds are beginning to form over China’s economy. After years of double-digit growth, growing pay, an emerging middle class and low inflation, the country has been rocked by some events in the last several months.

In addition to the snowstorms earlier this year and last month’s earthquake, the country is also grappling with inflation. The Associated Press reports that surging energy prices could add to the inflationary pressures. In recent months, the rate has hung around 12-year highs. April’s inflation was 8.5%.

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