Relative Performance of Chinese Stock Market vs. the S&P 500
I saw a man discuss the relative performance between the Shanghai Composite and the S&P 500, and he suggested that based on that analysis, the Chinese market was set to outperform the US market. But I wasn't satisfied with the analysis because he established his ratio in arithmetic scale, which gives it a bit of a distorted look, given the terrific swings the Chinese markets can and have had.
In log scale, perhaps a very different picture emerges. One, the periods of great outperformance show a steady decline over the years. And also, a break of trend happened in 2018, when world GDP began its slow decline, meaning: since that time, as all markets have suffered, the Chinese markets have suffered more than US markets have.
And it even looks as if both of these trend lines are now serving as overhead resistance. Unless the Chinese markets can break through these, we may actually be looking at evidence of a period of terrible underperformance ahead for Chinese markets.
In log scale, perhaps a very different picture emerges. One, the periods of great outperformance show a steady decline over the years. And also, a break of trend happened in 2018, when world GDP began its slow decline, meaning: since that time, as all markets have suffered, the Chinese markets have suffered more than US markets have.
And it even looks as if both of these trend lines are now serving as overhead resistance. Unless the Chinese markets can break through these, we may actually be looking at evidence of a period of terrible underperformance ahead for Chinese markets.