Shanghai Calling Again

My Dearest Moo Moo Cow,

I have noted that you had blogged on the following postiing called Shanghai 180 yesterday. So I was most interested when I noted the following editorial on FSO called The Great Unkowns.

Here is what Yiannis G. Mostrous, author of the Growth Engines is saying...

• The world’s markets are still in bull mode, with the majority of investors trying to capture this new leg up. As a Hong Kong-based investor told me recently during a phone conversation, “It feels like the correction never took place.”
  
  The reference was in regard to the 9 percent one-day drop in the Chinese stock market on February 27--the largest selloff in 10 years.
  
  Nevertheless, the Chinese market is vulnerable to a new decline in the not-so-distant future. The drop could be as big as 20 percent, and markets around the world would take notice again. Although the trigger could be almost anything (there was no real news that led to the previous selloff), the main reason is this market’s extremely high valuations.
  
  Based on reliable information, retail investors in China have been eager to play the market. Although this isn’t a bad indicator on its own, the problem is that there’s early evidence that money is flowing through mortgages and credit card loans into the stock market.
  
  The Chinese are known to be great momentum players, but practices of that sort have proved harmful before and will be again this time around. The timing, of course, is another issue...

Good comments posted in my opinion. And Mr. Mostrous reminds that..

• Volatility doesn’t mean bear market, and that can be a welcome, healthy change.

Now the issue is this...

If say or rather let's ass-u-me that another correction is possible in the Shanghai 180. The simple reasoning is that this market is at extremely dizzy heights at this moment of time. And even if one ass-u-me that the uptrend is still intact, I wonder what is the impact on the global market if Shanghai 180 does correct? Remember no markets goes up forever and ever, yes? Would Shanghai 180 do an orchestrated slow correction? Or would we see another drastic correction? And if it does happen, what is the impact on the global markets?

How?

Do you think this is an issue? Or do you think this is a non-issue?

rgds