India had benefited immensely from the poor performance of BRICS economies, especially China which hitherto was considered the engine of the world's economic growth. The advantage to India has been two fold - lower commodity prices and disproportionate allocation of funds among the emerging markets.
The following update published by Elliott Wave International indicates why an extended economic downtrend in China has investors scouting for other markets with domestic consumption story.
While India has moved on post consolidation, China still lies low, but not long before it catches up.
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Should You Get Used to China's "New Normal" of Falling Stocks?
Elliott Wave International’s current Asian-Pacific Financial Forecast shows you key price levels that could dramatically shift the Shanghai Composite’s trend
By Nico Isaac
Tue, 01 Jul 2014 15:15:00 ET
If you're afraid of heights, I suggest NOT reading the July 1 MarketWatch story about how China's ultra rich opt to dine in "high" style: $1430 (per person) includes a feast of caviar and foie gras, to consume while strapped in a chair on a crane 165 feet above the earth.
How you hold down your food under the stomach-churning circumstance is beyond me. But the image does befit the increasingly perilous position that China's economy finds itself on the ground below.
Here, we cull from the recent pool of stats and show you how, one by one, the cables holding up the former economic superpower have snapped:
China's total bank debt has grown from $14 trillion in 2008 to $25 trillion today
Many analysts expect China's GDP to slow to a low of 5% in 2014
In May, China's home prices experienced their first month-over-month fall in two years
And China's own President Xi Jinping recently pushed his citizens to adapt to a "new normal" of slower economic growth.
The fundamental backdrop is brutally negative. The natural next step for those who say economic data drives the performance in equities is to get the heck out of Beijing. In June, a 4-Part Bloomberg series on China by a bearish economist advised doing exactly that: namely, "Shorting Chinese Stocks."
Should you heed the call?
Well, what if we told you that the same exact data cited now as proof of China's long-standing bear market was cited five years ago – but as proof of its long-standing bull market? Only THEN, all of those indicators were pointing UP. Now, it's DOWN.See for yourself. Here, a 2009 CNBC resets the scene:
"China is now experiencing what the United States did during the Industrial Revolution. It's like the only successful story in the global economy. It's like the locomotive pulling the globe..."
But before the year's end, China's locomotive slipped off its tracks and spiraled out of control. That July, the Shanghai Composite (ticker symbol: SSE) also peaked, turning down in a 40%-plus selloff to the 5-year lows we see today.
The month of the SSE's reversal, our July 2009 Asian-Pacific Financial Forecast identified ample evidence "in support for a top," including waning momentum, declining brokerage account openings, and above all, a key bearish Elliott wave pattern: A five-wave move coming to an end, which we labeled on this very chart:
Should You Get Used to China's "New Normal" of Falling Stocks?
Elliott Wave International’s current Asian-Pacific Financial Forecast shows you key price levels that could dramatically shift the Shanghai Composite’s trend
By Nico Isaac
Tue, 01 Jul 2014 15:15:00 ET
If you're afraid of heights, I suggest NOT reading the July 1 MarketWatch story about how China's ultra rich opt to dine in "high" style: $1430 (per person) includes a feast of caviar and foie gras, to consume while strapped in a chair on a crane 165 feet above the earth.
How you hold down your food under the stomach-churning circumstance is beyond me. But the image does befit the increasingly perilous position that China's economy finds itself on the ground below.
Here, we cull from the recent pool of stats and show you how, one by one, the cables holding up the former economic superpower have snapped:
China's total bank debt has grown from $14 trillion in 2008 to $25 trillion today
Many analysts expect China's GDP to slow to a low of 5% in 2014
In May, China's home prices experienced their first month-over-month fall in two years
And China's own President Xi Jinping recently pushed his citizens to adapt to a "new normal" of slower economic growth.
The fundamental backdrop is brutally negative. The natural next step for those who say economic data drives the performance in equities is to get the heck out of Beijing. In June, a 4-Part Bloomberg series on China by a bearish economist advised doing exactly that: namely, "Shorting Chinese Stocks."
Should you heed the call?
Well, what if we told you that the same exact data cited now as proof of China's long-standing bear market was cited five years ago – but as proof of its long-standing bull market? Only THEN, all of those indicators were pointing UP. Now, it's DOWN.See for yourself. Here, a 2009 CNBC resets the scene:
"China is now experiencing what the United States did during the Industrial Revolution. It's like the only successful story in the global economy. It's like the locomotive pulling the globe..."
But before the year's end, China's locomotive slipped off its tracks and spiraled out of control. That July, the Shanghai Composite (ticker symbol: SSE) also peaked, turning down in a 40%-plus selloff to the 5-year lows we see today.
The month of the SSE's reversal, our July 2009 Asian-Pacific Financial Forecast identified ample evidence "in support for a top," including waning momentum, declining brokerage account openings, and above all, a key bearish Elliott wave pattern: A five-wave move coming to an end, which we labeled on this very chart:
Should you heed the bearish call? We asked you this earlier. Now you know where not to look for the answer: amidst the economic data. Before the data was bullish – yet stocks peaked. Today, the data is bearish. And stocks, well --
