Indiana Grain Company, LLC

Posted: 02/12/10

By: tomgrisafi

Here at Indiana Grain we have definitely noticed Chinese Equity markets trending downward as of late and perhaps the so called "Chinese New Year Effect" is coming to fruition.

Martin Roberge with Dundee Capital Markets, says the downward trend is nothing but what he calls the "Chinese New Year Effect".

Through Roberge's research he has found that since 1996, the Chinese stock market has declined nearly 4% in the 30 days leading up to the Chinese New Year. "Chinese investors tend to flee the equity market ahead of retail and manufacturing slowdown", says Roberge in a note to his clients. He also goes on to say the Chinese equity markets needs another 50 days after the holiday to revisit its January highs.

The Chinese New Years celebration lasts for over two weeks, while the majority of businesses close just for the first week. Unlike the The U.S new year which falls on the same date, Chinese New year is based on the lunar cycle, and falls on a different day each year.

Whether you buy the "Chinese New Year Effect" or not, we here at Indiana Grain know for a fact things certainly do slow down during the holiday.