By Michael Patterson
April 2 (Bloomberg) -- China is the only country worldwide where stock investors are more optimistic than on Sept. 15, the day Lehman Brothers Holdings Inc.’s bankruptcy shattered confidence in the global financial system.
The CHART OF THE DAY shows the Shanghai Composite Index rising 16 percent since Sept. 15. The gain is the only among 70 major equity benchmarks tracked by Bloomberg even after global stocks posted their best monthly rally since 2003 in March. The index of China’s so-called A shares, which are traded almost exclusively by local investors, beat benchmarks in the world’s five other biggest markets by at least 39 percentage points in the period.
The Shanghai index fell as much as 18 percent in the two months after Lehman’s bankruptcy, tracking declines in equities worldwide on concern bank failures would spur a global recession and hurt demand for manufactured goods. Chinese stocks rebounded since November, pushing the Shanghai gauge to a seven-month high yesterday on speculation the government’s 4 trillion yuan ($586 billion) stimulus plan will offset a record drop in exports.
“Mr. Market is telling us that it’s highly possible the regime can switch the economy from exporting Barbie dolls to America, to stimulating its own domestic economy,” said Robin Griffiths, who helps oversee about $15 billion as the chief technical strategist at Cazenove Capital in London.
Lehman, once the fourth-biggest U.S. investment bank, was forced into bankruptcy after losses on mortgage securities drove away lenders and potential suitors. The New York-based company’s collapse sparked a freeze in global credit markets as banks hoarded cash.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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