One wild ride in Shanghai

Scott Tong Jun 4, 2007
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One wild ride in Shanghai

Scott Tong Jun 4, 2007
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TEXT OF INTERVIEW

SCOTT JAGOW: I daresay the Chinese stock market is like riding a mechanical bull. Not that I’ve ridden one, but the ups and downs look brutal. Today, China’s main index plunged more than 8 percent. Last week, Shanghai set a record on Tuesday. Then dove 6 percent on Wednesday. Our correspondent Scott Tong joins us from Shanghai. What’s behind all the volatility?

SCOTT TONG: Well we have to remember the Chinese stock market has just soared in the last year and a half, and there a lot of rumors now about whether the government is going to intervene and how. Now last week the government took this stock trading tax and they tripled it and the market fell, and there’s been talk of another tax coming on capital gains. So there’s this big rumor mill going on. Now I talked to one analyst and he said you never know. It could be that today is June 4, which is the 18th anniversary of the Tiananmen Square massacre and people get nervous on days like this. Another rumor said it could be the lunar calendar and this is a bad astrological day, so you may never know on any particular day.

JAGOW: But at the same time you have the other Asian markets had gains today, European shares are up a little bit, so other investors don’t seem to care that much about the Chinese plunge. Why not?

TONG: Well you remember in February the whole rest of the world cared a whole lot when the Chinese market plunged more than 9 percent, the rest of the world flipped out. Now at the time a lot of people were sayingl et’s pay attention to China’s stock market: It is largely closed off to foreign investors. The stock market doesn’t necessarily refelect the Chinese economy. So some people are saying you know the world has learned, the world is paying attention to what’s really happening in China.

JAGOW: Alright Scott Tong in Shanghai, thanks so much.

TONG: Alright Scott.

TEXT OF INTERVIEW

SCOTT JAGOW: I daresay the Chinese stock market is like riding a mechanical bull. Not that I’ve ridden one, but the ups and downs look brutal. Today, China’s main index plunged more than 8 percent. Last week, Shanghai set a record on Tuesday. Then dove 6 percent on Wednesday. Our correspondent Scott Tong joins us from Shanghai. What’s behind all the volatility?

SCOTT TONG: Well we have to remember the Chinese stock market has just soared in the last year and a half, and there a lot of rumors now about whether the government is going to intervene and how. Now last week the government took this stock trading tax and they tripled it and the market fell, and there’s been talk of another tax coming on capital gains. So there’s this big rumor mill going on. Now I talked to one analyst and he said you never know. It could be that today is June 4, which is the 18th anniversary of the Tiananmen Square massacre and people get nervous on days like this. Another rumor said it could be the lunar calendar and this is a bad astrological day, so you may never know on any particular day.

JAGOW: But at the same time you have the other Asian markets had gains today, European shares are up a little bit, so other investors don’t seem to care that much about the Chinese plunge. Why not?

TONG: Well you remember in February the whole rest of the world cared a whole lot when the Chinese market plunged more than 9 percent, the rest of the world flipped out. Now at the time a lot of people were sayingl et’s pay attention to China’s stock market: It is largely closed off to foreign investors. The stock market doesn’t necessarily refelect the Chinese economy. So some people are saying you know the world has learned, the world is paying attention to what’s really happening in China.

JAGOW: Alright Scott Tong in Shanghai, thanks so much.

TONG: Alright Scott.

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