Leading The Way, or Just Pretty Charts?

21 Apr

The charts below illustrate the sudden and dramatic drop in the Chinese Real Estate and Financial Indexes over the past few days:

The real estate and financial sectors have been good lead indicators for cyclical performance.  If we assume that these are the results of the Chinese authorities ‘putting the brakes on’ the economy it certainly makes sense to see movements in these indices at lead indicators for other segments of the market.

In fact, look at the chart below.  It highlights the relative performance of the Chinese retail sector against the real estate index – real estate is clearly a leading indicator.

Granted these are just charts, and don’t PROVE anything – but they make for interesting reading!


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