Shanghai Scrap

[File Under: What You Missed During the Olympics]

Whatever else it may have buoyed, these Olympics have done nothing for China’s ailing stocks markets. On Monday, while most of China was busy being shocked by Liu Xiang’s dramatic pull-back, the nation’s investors were selling, as the Shanghai Composite drop another 5.89% to a nineteen month low. According to Xinhua, the drop was mostly attributable to 18.9 million shares suddenly becoming available for trading (the largest single-week float on the Shanghai Composite ever?). And, in a startling display of poor confidence – most of those shares are, apparently, being sold.

On the bright side (the take your medicine side), multiple news outlets report that the sell-off was partly prompted by strong central government signals that it wasn’t going to do anything more to buoy the decline. Perhaps, with the Olympics nearly over, somebody in Beijing has finally stopped worrying that share price declines might lead to social unrest, and decided to let the proverbial market chips finally fall where they may.

In either case, three quick observations. First, for all of the feelings of national pride abounding in China right now, it’s interesting – and heartening – to see that hard business sense continues to prevail. The markets stink, no matter how many medals China wins. Second, this shouldn’t come as any surprise to anyone who talks to Shanghai’s merchant class: nobody’s doing deals right now, especially in the real estate sector. And third, anybody predicting a post-Olympics slow-down needs to re-assess: there’s a slow-down all right, but it has everything to do with the greater Chinese economy, and nothing to do with the wrap-up of Beijing’s giant construction project.

Off to Qingdao in a few minutes – will post sailing competition photos later tonight.