Mohamed El-Erian Says Keep A Close Eye on Chinese Stocks

Mohamed A. El-Erian | Facebook: "Lots of people will (and should) be keeping a close eye on Chinese stocks this week, starting with the government. In partnership with brokerage firms, the authorities opted for a big bang package over the weekend to stabilize what had been a volatile and rapidly correcting market (chart below from cnbc.com). This intervention reflects concerns about the risk of an adverse economic and social fallout. It did not take long for markets on Monday to test the robustness of the measures. The same is happening at the start of Tuesday’s session. Failure to contain volatility could lead to another leg down in stocks."

#China #Bubble

CSI 500 Index

SHCOMP INDEX - SHCOMP:IND (source: Bloomberg)

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. Index trade volume on Q is scaled down by a factor of 1000.

For comparison: S&P500 Index (US)

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