Hands Off China's Stock Market
— July 8, 2015
By Jennifer Carpenter and Robert Whitelaw
After making a series of moves towards a more market-based economy, it seems that the authorities have lost some faith in the power of markets. This lack of faith does not bode well for the future.
In the 12 months through the market peak on June 12, the Shanghai index was up 152 percent, with the more tech and small stock heavy Shenzhen index climbing 195 percent over the same period. In the subsequent 15 trading days, these two indices lost 29 percent and 33 percent of their value, respectively. These stock market moves in both directions have been extreme, but while they are not exactly reassuring from an investor's, or even an economist's, perspective, they are understandable. Here's why.
Read full article as published by CNBC
Jennifer Carpenter is an Associate Professor of Finance. Robert Whitelaw is the Edward C. Johnson 3D Professor of Entrepreneurial Finance.