Salient to Investors:

Shanghai Composite Index is down 9.9 percent this quarter, down 8.9 percent in 2012, is the worst performer among global markets after Cyprus, and sells for 9.3 times estimated earnings versus an average of 18 since 2006.

Wang Zheng at Jingxi Investment Mgmt said the market has no confidence in China’s old growth model of investment and exports, and with no new engine stocks are performing poorly.

Dennis Lim at Templeton Asset Mgmt said China’s stocks have fallen because of low investor confidence, share oversupply, and concerns about corporate governance. Lim says when the rebound comes, it could happen very quickly, can be very sharp and strong, because it’s all about investor sentiment.

China’s effort to curb a real-estate bubble has included imposing a property tax for the first time in Shanghai and Chongqing, raising down-payment and mortgage requirements, increasing building of low-cost social housing and placing home purchase restrictions in 40 cities.

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