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Rosy News Haunts Shanghai Stock Exchange Print E-mail
by Tom McGregor    Tue, Nov 20, 2012, 04:07 PM

Access Shanghai.jpgThe stock market is considered a leading indicator of how the national economy would perform six months from now. Well if that were true, a nightmare scenario awaits the Chinese economy.

The Shanghai Stock Exchange has crashed in the past few years. After the SSE Composite Index surged to 6,124.04 in October 2007, it has plummeted by over 70 percent in value as of late September. The index fell 23 percent in 2011 and 14 percent in 2010 and dropped another 13 percent in the first half of this year.

Nevertheless, China’s GDP has risen at or near double-digit annual growth rates during the same time frame. So, why has the SSE acted as a lagging indicator? Well, a few Chinese investors, speaking off-the-record, have expressed their concerns about buying and selling stocks in the Shanghai and Shenzhen stock exchanges.

Many complain that Chinese business news reporters have failed in their duty to provide accurate information. They accuse domestic-based media outlets of leaning towards painting a rosy picture of the economy, which appears too good to be true.

They believe that Chinese business journalists seem to be making sales pitches rather than delivering the real facts on publicly listed companies here.

A young woman, working for a state-owned enterprise, said, “I don’t read business news articles, because they all look the same. They just say China’s economy is doing great along with the companies listed in this article …”

She mocked current SSE investors as “hopelessly naiveté.” Yet, she’s not alone with her sentiments.

To read the entire article from SINA English News, link here:

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