Shanghai Composite Index dives 5.8%

The Shanghai Composite Index (SCI) tumbled 5.8% on Monday dragging the benchmark index down 16% for the month, despite indications that China’s economic recovery has begun to find its feet, the Wall Street Journal reported. Stocks fell across Asia in response to concerns about the US economy and flagging corporate earnings. Chinese stocks were hit hardest, led by commodity-related stocks. Despite Monday’s steep fall, the SCI remains up 58% this year, and was up 91% earlier in the month. Citigroup economist Ken Peng said the declining market may not reflect weakness in the mainland economy. "China’s growth outlook is just beginning to show more signs of durability," he said. Peng raised his 2009 forecast for GDP growth by half a percentage point to 8.7% and by a full percentage point for next year to 9.8%.