ISAS Insights

The Hong Kong and the Shanghai indexes recovered by 2% in early trading on 25 August 2015, after a free fall a day earlier that dragged down indices all over the world. The stock markets in China appeared to continue on a downward trend subsequently that day. The opening (3004) was lower than the closing numbers (3209), but there has been a correction by 28 August. The correction indicates that there is still value in the stocks that are being traded, and that valuations over a one-year as well as a five-year time-frame are still positive. The index was 2217 on 30 August 2014, and 3080 in early trading on 25 August 2015, a gain of over 40%. It is true that the index had reached 5166 on 12 June, a growth of 150%, and has lost substantially since then: but the inherent strength of the Chinese economy is evident from the fact the index is substantially higher than at this point last year.