Taps Coogan – August 2nd, 2021

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Is a roll-over coming for the Nasdaq? The following chart from Crescat Capital’s Otavio Costa certainly suggests so.

Chinese ADRs refer to the Chinese companies listed in the US, in this case, on the Nasdaq. Such companies have come under unique pressure over the last few months as the CCP has cracked down on them for being listed in the US, among other reasons. The Chinese authorities have also tightened credit conditions in China at a record pace. All in all, Chinese shares listed in the US are down nearly 50%.

There is a good case to make that the unusually China-specific drivers of the selloff in US-listed Chinese shares mean that the correlation to the Nasdaq won’t be as strong as it has been in the past. Let’s hope, because these markets are quite frothy.

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