As of Wednesday’s market close, we entered a bear market that could weigh on stocks and exchange traded funds (ETFs) for the time being. But here’s a riddle: if a bear market is typically defined as a market that has fallen 20% off its recent high, what’s it called in China, which is down 60%?

Scott Tong for Marketplace says Shanghai is down "three bears" by that math. The problems vexing China are similar to those in the rest of the world: energy prices, automakers and so on.

China is still predicted to grow 8% to 9% this year, and Tong points out that the stock market isn’t always so reflective of the broader economy because it’s relatively small and heavy in retail investors. That makes the market there more subject to the feelings of the people.

China ETFs have taken a big hit so far this year, after a solid 2007:

  • iShares FTSE/Xinhua China 25 (FXI), down 25.4% year-to-date
  • NETS Hang Seng China Enterprises Index Fund (SNO), launched on May 22
  • Claymore/AlphaShares China Small Cap Index (HAO), down 20.4% since Jan. 30 inception


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.