Less than 48 hours ago the Hang Seng closed down -12.7% for the day, which was its worst one day decline the Tiananmen Square crackdown in May 1989. The talking heads on T.V. were very vocal in emphasizing this point and comparing the sell off between those periods, even though they have no fundamental association.
Since the pundits were comparing this decline in the Hang Seng market to the decline during Tiananmen Square, we thought we would look back at the charts. No surprise, the Tiananmen Square sell of 1989 marked a panic bottom . . . and over the next 12-months the Hang Seng was up +50%.
We wonder what the “Global Recession” sell off in Hong Kong was marking earlier this week, probably not the top. Bottoms are processes, not points – oh, and by the way, the EWH was up a nifty +17% today… how ironic.
Daryl G. Jones