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Banking, finance, and taxes

Nasdaq To Launch China Stock Index

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By Douglas A. McIntyre Published
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Nasdaq (NADQ) will launch a financial instrument that will include 30 stocks from major Chinese companies that trade on US exchanges. Perhaps the drop in Chinese exchanges that caused a sell-off in US stocks last month got their attention.

Nasdaq probably thinks that the new index will be popular because the markets in China seem to go up about 100% each year. Over the last 12 months, the Shanghai Composite is up 140%. The Hang Seng in Hong Kong is up a much more modest 25% over the same period.

The problem with the new index is that it will be volatile. The Shanghai Exchange dropped 9% from February 23 to February 27. While the new product may be a good investment for institutions, it may be a bit dangerous for individual investors.

A market that is up 140% in a year will probably correct by a huge sum, if and when a real correction comes. And, it always does.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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