The benchmark Shanghai Composite Index plunged 342.39 points, or 7.19 percent, to 4,419.29.
Here are my predictions from the 25th May 2007:
Here are those predictions from the 25th May. Another 30 posts on the stockmarket and my doom laden predictions can be found HERE.
China's Stockmarket - "how does it work"?
1. Stockmarket will continue to rise perhaps by another 25-30% over the next 6 months to a year. 5000 could be the psychological barrier that is a digit too far. There will be a series of small hiccups on the way.
2. What will follow will be a trigger than may, by itself, seem quite unimportant that will lead to a widespread sell off of Chinese stocks with perhaps a 10-15% one day fall.
3. Over the next year shares will fall by as much as 40-50% off their all time highs before stabilising.
4. The knock on effect on the world markets will not be as great as some commentators fear but there will be some contagion effect on neighbouring exchanges.
5. Internally, real estate prices will fall and many individuals will be wiped out. Given the large share holdings by the Police, Army and state owned enterprises what happens then is anyone's guess but it could conceivably get quite ugly quite quickly.
If we look at these now, my predictions were looking rather sad as shares sailed up past the 5000 mark before topping out just above 6000 late October 2007.
Since then we have had a steady decline with the Shanghai composite closing at 4419 yesterday, 28th January 2008.
So we had a greater rise than I expected but note that prediction 2 was for stocks to be 40-50% off highs. We are already getting close to that.
We are on target nicely.