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Wednesday
Nov022011

China Breaks 50-Day

As shown in the first chart below, China's Shanghai Composite was finally able to close above its 50-day moving average today for the first time in months.

China is still considered an emerging market, and emerging markets are generally considered to be much more volatile and less liquid than developed markets like the US.  However, US equities have recently been much more volatile on a day-to-day basis than Chinese equities.  Below is a chart showing the rolling 50-day average absolute daily % change for both the S&P 500 and Shanghai Composite.  Over the last 50 days, the S&P 500's daily move has averaged +/-1.60%, while the Shanghai Composite's daily move has been just +/-1.0%.  You can see in the chart that Chinese stocks were much more volatile than US stocks back in the 90s and for most of the 2000s.  Along with the depths of the 2008 financial crisis and a short period of time between 2002 and 2003, the current period is one of just a few times where volatility here in the US has been higher than volatility in China.  Time will tell if this trend holds for a longer period of time.

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