Contagion? No, Wake-Up Call

It's not the '90s, but it's a good time for investors to pull back from Asian markets

Pretty much everyone knows the Shanghai stock exchange is a casino. So after Chinese speculators propelled the bourse up by 135%, what's a measly 9% dip? To global markets, it apparently matters a great deal. Minutes after rumors of a government tax-policy shift triggered selling in Shanghai, investors began fleeing emerging markets from Mexico City to Mumbai. On Wall Street, already jittery over mixed economic news, China provided the spark for the steepest one-day dive in stock prices since March, 2003 (see, 2/28/07, "Stocks' Great Wall of Worry").

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