The Shanghai Stock Exchange always worse, now at the lowest values since 2009

Yesterday the composite index fell below 2,000 points. In the year it has fallen by 9.5%, worse than the Stock Exchanges of Madrid or Athens. Many are asking for a government intervention like that of 2008. But the problem remains that of changing a drugged economy.

Shanghai (AsiaNews/Agencies) - The Shanghai stock exchange continues to worry the financial world. Yesterday the composite index of the largest stock market in China dropped below the psychologically-important threshold of 2,000 points. Today's figures are not yet available, but yesterday's was the lowest figure since January 2009, in the middle of the subprime crisis.

What amazes investors is that while there are signs of economic recovery - albeit small ones - the Shanghai stock market continues to drop: it is the stock market with the worst results in two years. And so far, in 2012 the index has fallen by 9.5%.

During the same period, the two Euro countries most at risk, Spain and Greece, have had better results: the Madrid Stock Exchange fell by only 3% and the Athens Stock Exchange has managed to rise by 26%.

According to analysts interviewed by the China Daily, the problem comes from the fact that in China there is no liquid money to support an increase in the stock market.

In 2008, when the international market was already suffering financial turmoil, Beijing launched a 4 trillion yuan stimulus package, which breathed new life into the market, but also opened the door to speculation and inflation. A 2009 state report shows that at least 1.2 trillion yuan of the package were misused to speculate on stocks.

Many people want Xi Jinping's new government to give a further boost to loans, to lift the stock markets and finance. But the grave experience of these years (speculation, high inflation, useless pharaonic projects) has made leadership very cautious.

Moreover, the signals that appeared in recent days as a sign of recovery, are still very tenuous. The PMI index is slightly above 50 (50.4 to be exact), indicating expansion, but an increase of 0.4 is very little for a country that should be growing by 8% according to estimates.

It is increasingly evident that "China's economy is drugged". This is why the markets are languishing.