The new bear market: China

Resist the urge to buy in China's bear market; the better bet is to use caution.

By Kim Peterson May 18, 2010 5:07PM
Michael BrushBy Michael Brush

It's official. China is now in a bear market.

Technically defined as a 20% decline following a rally of at least 20%, the bear surfaced in Chinese stocks last week when the Shanghai Composite index posted losses that took it 21% below November 2009 highs. 

While it may be tempting to buy Chinese stocks on such a large retreat for stocks of companies working in an economy with robust 11.9% annual growth, it's wiser to remain cautious with this bear.

It's no cute and cuddly panda just yet, if history is any guide. 

On average since 1990, Chinese bear markets take stocks down 35%, according to the market research firm Bespoke Investment Group, and the current 23% decline isn't even close. Plus the Shanghai Composite last week fell below last August lows of 2,667.75, a negative technical sign.

"The current technicals suggest that there's more downside in store for China’s bear market in stocks," says Bespoke Investment Group. 
 
 
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

118
118 rated 1
270
270 rated 2
472
472 rated 3
714
714 rated 4
624
624 rated 5
608
608 rated 6
623
623 rated 7
445
445 rated 8
319
319 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
CELGCELGENE CORP10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.