Nasdaq To Launch China Stock Index
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From 247WallSt
Nasdaq (Nasdaq: NADQ) will launch a financial instrument that will include 30 stocks from major Chinese companies that trade on US exchanges. Perhaps the drop in Chinese exchanges that caused a sell-off in US stocks last month got their attention.
Nasdaq probably thinks that the new index will be popular because the markets in China seem to go up about 100% each year. Over the last 12 months, the Shanghai Composite is up 140%. The Hang Seng in Hong Kong is up a much more modest 25% over the same period.
The problem with the new index is that it will be volatile. The Shanghai Exchange dropped 9% from February 23 to February 27. While the new product may be a good investment for institutions, it may be a bit dangerous for individual investors.
A market that is up 140% in a year will probably correct by a huge sum, if and when a real correction comes. And, it always does.
Douglas A. McIntyre
For more market insight go to http://www.247wallst.com/
Nasdaq (Nasdaq: NADQ) will launch a financial instrument that will include 30 stocks from major Chinese companies that trade on US exchanges. Perhaps the drop in Chinese exchanges that caused a sell-off in US stocks last month got their attention.
Nasdaq probably thinks that the new index will be popular because the markets in China seem to go up about 100% each year. Over the last 12 months, the Shanghai Composite is up 140%. The Hang Seng in Hong Kong is up a much more modest 25% over the same period.
The problem with the new index is that it will be volatile. The Shanghai Exchange dropped 9% from February 23 to February 27. While the new product may be a good investment for institutions, it may be a bit dangerous for individual investors.
A market that is up 140% in a year will probably correct by a huge sum, if and when a real correction comes. And, it always does.
Douglas A. McIntyre
For more market insight go to http://www.247wallst.com/
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