by Calculated Risk on 6/12/2008 01:40:00 AM

Remember when the Shanghai stock market declined 9% on Feb 27, 2007? That caused shock waves around the world, including a 400 points decline in the DOW index the following day. After falling to 2772 in Feb 2007, the SSE composite index more than doubled!

Click on graph for larger image in new window.

Now the index has fallen back below 3,000 - still above the close after the one day sell off - but 50% below the peak.

This is some serious cliff diving.

This sell off could be in anticipation of a slowing Chinese economy, and I wouldn't be surprised to finally see a slowdown in China after the Olympics this summer. And a Chinese slowdown might lead to lower oil prices - something else to watch later this year.