Despite the European Bazooka,Falling Chinese Stocks May Point to a Market Top

Europe’s $970 Billion Bazooka yesterday certainly led to a “defeat” of the “speculators” yesterday as major European markets climbed by 5% while smaller ones climbed by 9-11%.Even the Asian and American markets rallied strongly in sympathy.However the Euro has fallen back sharply  to 1.27 after rallying to more than 1.3 as people are still concerned about the long term structural problems of the PIGS whose solution was not spelled out.More intriguing is the continuously falling China’s stock market which made a 11 month low.I was writing in my earlier post that this might be the Harbinger of a Market Top.China is the most important engine of growth for the world demand currently and with the stock market there pointing to problems with high real estate prices and inflation , investors certainly need to take note.

China shares hit 11-month low on overheating fears – Economic Times

Chinese shares hit an 11-month low Tuesday after higher April inflation sparked investor fears of more credit tightening.

The benchmark Shanghai Composite Index lost 51.18 points, or 1.9 percent, to close at 2,647.57, its lowest level since last May 27. The Shenzhen Composite Index for China’s smaller second exchange fell 2.4 percent to 1,024.65. Worries about economic overheating were mounting after the government on Tuesday reported higher-than-expected bank lending and producer prices for April, while the inflation surged to an 18-month high. “Investors worry there is a chance of the economy overheating, and that might trigger more government policy tightening,” said Huang Xiangbin, an analyst for Cinda Securities in Beijing.

Beijing has announced several rounds of measures to cool housing and consumer prices, including imposing mortgage lending curbs and ordering banks to divert more money into reserves.