“There are reasons for the correction. They range from disappointment that index provider MSCI decided against including the market in its global benchmark index – as yet – earlier this month. There have also been cutbacks on margin lending (the ability to buy stocks with borrowed money). You don’t see indices double in a year (the Shanghai Composite had in fact more than doubled) and expect smooth running from then on in. As Capital Economics put it: ‘Turnover on the Shanghai and Shenzhen exchanges was up 400% year-on-year in the second quarter. That rate of growth is clearly unsustainable.’ And it’s probably healthy if it corrects a bit further. But this doesn’t mark an end to the good times.”
http://moneyweek.com/chinese-stocks-bear-market-wont-last/
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