World Stock Market Leader - China

China’s stock market has foreshadowed moves in global equities the past two years. It peaked on Oct. 16, 2007, two weeks before the MSCI All-Country World Index. The Shanghai index fell 72 percent from its 2007 high and bottomed on Nov. 4, 2008, four months before the MSCI index. The Chinese measure reached its 2009 high on Aug. 4, seven trading days before the global index.

People are hanging their hopes on China pulling us out of a recession. China’s growth looks great, but things may be a bit overstated. There has been a lot more integration of global markets over the past couple of years.

The focus of global markets is what’s happening in China. But in the current stage, China will have to remove liquidity from the market, and it’s likely that commodities will suffer and it means worse sentiment towards risk in general.