The Shanghai Composite Index was down 2.91%. Tuesday’s 8.8% drop was followed by a slight recovery, but precipitated strong declines worldwide, and it appears that China is leading the way, bullish or bearish.
While the Chinese market has a long way to go before one can call it truly “overvalued,” skepticism and the specter of stricter taxes and regulations are warning signs of a rocky road ahead.
For now, it seems that world markets are likely to follow the lead of the Chinese stocks. Japan’s Nikkei ended Thursday down for its third straight day (-1.2%), and Hong Kong’s Hang Seng index was down 0.5%.