The world markets rise or fall for various reasons. The major drivers - the US markets - are the most likely trendsetters for the rest of the global markets. However, on certain days our neighbouring Chinese markets have their say on the rest of the markets.
A look at the historic data of world markets from 2008 onwards with China at the helm reveals an interesting picture. The world markets seem to have tracked the Chinese markets more on the negative days than on the positive ones. In the last 17 and half months, China's Shanghai Composite has fallen over 5 per cent 16 times and world markets have declined on 10 of these occasions.
The world markets included in the study are US' Dow Jones, Nasdaq, S&P 500; Europe's FTSE 100; Asia's BSE Sensex, Hang Seng; Nikkei Straits Times and Taiwan Weighted Index.
The big falls in the Chinese markets, ie over 7 per cent falls, have come on days of global sell-offs which include problems such as the subprime crisis and economic slowdown. On other days, liquidity concerns and fall in commodities prices have dented the investor sentiment in China.
On the other hand, the Chinese markets have registered gains in excess of over 5 per cent nine times so far in the same period. Out of these nine occasions, the world markets have rallied in tandem on just four occasions. The highest gains of over 9 per cent each have come on back of tax sops announced by the Chinese government.
A look at the two tables below reveals how the world markets have performed on days when the Chinese markets have posted significant directional moves.
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When China's Shanghai rises…
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Date
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Dow
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Nasdaq
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S&P 500
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FTSE 100
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Sensex
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Hang Seng
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Nikkei
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Shanghai
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Straits Times
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Taiwan
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9/19/2008
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3.35
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3.40
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4.03
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8.84
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5.46
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9.61
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3.76
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9.45
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5.78
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5.82
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4/24/2008
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0.67
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0.99
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0.64
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-0.54
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0.14
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1.55
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-0.28
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9.29
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-0.51
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-0.20
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2/4/2008
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-0.85
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-1.26
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-1.05
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-0.05
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2.29
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3.77
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2.69
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8.13
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2.30
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-0.43
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9/22/2008
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-3.27
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-4.17
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-3.82
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-1.41
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-0.34
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1.58
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1.42
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7.77
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-0.58
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2.35
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8/20/2008
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0.61
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0.20
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0.62
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0.97
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0.92
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2.18
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-0.10
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7.63
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0.86
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0.89
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11/10/2008
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-0.82
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-1.86
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-1.27
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0.89
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5.74
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3.52
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5.81
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7.27
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1.16
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-0.04
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3/4/2009
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2.23
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2.48
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2.38
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3.81
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0.23
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2.47
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0.85
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6.12
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1.04
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2.39
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11/19/2008
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-5.07
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-6.53
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-6.12
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-4.82
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-1.83
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-0.77
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-0.66
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6.05
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-1.59
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-0.49
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6/18/2008
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-1.08
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-1.14
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-0.97
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-1.79
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-1.75
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1.16
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0.73
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5.24
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0.39
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0.19
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(All figures are % returns - Data by BS Research Bureau)
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Yesterday was the first time in calendar year 2009, that the world markets fell in tandem with the Chinese markets, while on March 4, 2009, the world markets rose in tandem with the Chinese markets.
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When China's Shanghai falls…
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Date
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Dow
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Nasdaq
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S&P 500
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FTSE 100
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Sensex
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Hang Seng
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Nikkei
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Shanghai
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Straits Times
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Taiwan
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6/10/2008
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0.08
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-0.43
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-0.24
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-0.86
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-1.17
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-4.21
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-1.13
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-7.73
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-1.65
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-2.54
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1/22/2008
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-1.06
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-2.04
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-1.11
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2.90
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-4.97
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-8.65
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-5.65
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-7.22
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-0.44
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-6.51
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1/28/2008
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1.45
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1.02
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1.75
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