Hong Kong and Shanghai Markets Diverge
July 05 2007:
On the day that Hong Kong's major index, the Hang Seng, hit 22,252.99 - its third straight record high - China's main stock index closed down more than 5 percent at 3,615.9.
The Shanghai Composite Index has been falling steadily now for two weeks, possibly indicating the onset of a medium-term correction in what had been a frenziedly rising market.
The Shanghai market had been driven to ever increasing levels for the first five months of 2007, as an economy awash with cheap money sought to place the money profitably.
The bull-run seems to have ended for the moment as money is diverted into a 1.55 trillion Yuan ($200 billion) issue of special treasury bonds issued by the Chinese Government and new share issues.