China's Stock Market "World's Worst" In '08

ANCHOR: The Shanghai Composite is down 56% this year, Hong Kong's Hang Seng Index is down 25%, and other Chinese markets are in similar territory. Worldwide stocks have fared poorly in 2008, but the end of the first-half corporate earnings reporting season has confirmed that China's setbacks are more than twice as severe as those of most other countries.

This follows 2007's unprecedented Chinese growth, which has since been interpreted by some as a sign of economic overheating. Chinese markets are notoriously unpredictable due to the high percentage of state-owned shares, leaving a small and volatile 'float' of publicly-traded stocks. In the words of China specialist Donald Straszheim, vice-chairman of the investment banking firm Roth Capital Partners, quote "Only in hindsight does China look like a bubble that was ripe for popping."

The New York Times 'Talking Business' columnist Joe Nocera, meanwhile, calls the dire economic figures unsurprising. Claiming that the sharp downturn is actually a return to reality, Nocera explains that, quote "It is hard to know how real the numbers are...in a banking sector that can keep quiet about bad loans — with the government's approval. "

When investors have low confidence in the official economic reports of the Chinese Communist Party, it is difficult to re-invigorate a failing market. In Nocera's words, quote "The government simply cannot will the market to go up again, much as it would like to."

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