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Shanghai Composite

Turning point or new beginning: why the drop?

Reading Time: 2 minutes

The Shanghai composites index hit a new YTD low last night (US time), with the help from PetroChina (PTR, 601857.SS) nearly 9% loss. Note PTR has 20% weight on the Shanghai index. Fundamentally, the Chinese public companies will have tough comparison this year. Last year with the effect of new accounting method (does this sounds familar, hint, Enron) last year, and a bull market, the companies were able to book record profit (unrealized investment gains). This year, with the recent stock market drop, if companies have not ring the register on the stocks, the unrealized investment gain will be unrealzied loss.

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