A new eight pound gorilla?

That was our first impression when we saw the impact the Chinese stock market correction had on other markets around the world. The more interesting observation, however, was the fact that it was not only developing countries that were impacted. Europe and the U.S. were also hit by this correction which brings to mind two important points. That economic integration on a global scale, better known as the global village project, is alive and kicking and that China is rapidly becoming the new eight pound gorilla on the block, despite the fact that its market capitalization as a percentage of the world capitalization is only slightly above 6% if we include Hong Kong. That's still way below the colossal 34% share that the U.S. commands. Nevertheless, we don't see much reason for worry as we subscribe to Greenspan's view that occasional corrections can have a cleansing and beneficial effect on markets. This is particularly true for markets that, by their very nature, are prone to speculative bubbles.