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Since November 2014, the Shanghai Composite Index, the main benchmark of the Chinese stock market, has not posted such weakness this month. By the end of last week, the index had fallen below its key support level of 2,650 and has continued to decline since then, setting a low of almost four years.
The combination of rising global interest rates, weaker economic growth forecasts for China, and growing trade disputes between the US and China has contributed to Chinese equities being heavier in recent weeks and months. .
Since the massive rise of the Shanghai Composite, which had peaked at 5,178 in June 2015, the index has fallen by just over 50%, to reach 2,561 at Wednesday's close. This year alone, the Chinese equity benchmark fell by more than 22%, falling well below its 200-day moving average.
Given that China's growth prospects have declined significantly and that US-China trade conflicts do not appear to be in the offing, the break-down and prolongation of the bear market for Chinese equities is expected to continue.
Source: TradingView
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