by Calculated Risk on 8/18/2008 09:45:00 PM

Click on graph for larger image in new window.

The Shanghai SSE composite index is now below 2320, the lowest since the amazing run up started in 2006. The index is off over 60% from the peak.

This is a stunning stock market crash. Usually a stock market crash leads to less business investment, and an economic slowdown.

The second graph compares the NASDAQ (as a percent from the peak) to changes in business investment in structures and software and equipment.

This shows that business investment in both categories went negative about 3 quarters after the stock market peaked. Of course there are major differences between the U.S. and China, but I'd expect business investment to slow in China.