What's behind Shanghai's rise, and will Korea rebound?
Money talks, and money flows into the market provide a more objective assessment of political and trade crises than official statements and tweets from presidents
Add BT as a preferred sourceTHE 22 per cent rise in the Shanghai Index over the past four weeks cannot be ignored. Nor can it be dismissed as an aberration. The sharp and sustained rise is consistent with the historical behaviour of the Shanghai Index. Many of those who missed the breakout like to make disparaging remarks about the Shanghai Index and the way it is dominated by retail traders.
This, they claim, is the reason behind the different volatility characteristics of the market. Markets dominated by herd-following fund managers have similar characteristics as large orders swamp the market, but structural market differences serve to dampen this volatility.
China does not permit short-trading so it makes it difficult for market participants of all ilks to develop hedging strategies that are a significant contributor to dampening volatility.
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