A real bear market in Hong Kong: CHL, PTR

Market analysts like to talk about whether the US is entering a bear market. Over the last quarter, the S&P is down a little over 10%. That is not much compared with the Hang Seng Index in China, which was off 24% during the same period and was recently down 30%.

Some of the world's largest companies are listed on the Hang Seng including cellular service giant China Mobile (NYSE:CHL) and big oil concern PetroChina (NYSE:PTR).

The bear market in Hong Kong may be a sign of concern that a dying recovery in the West will slow down exports from China. It is also a sign that inflation in the world's most populated country may be eroding the value of equities.

The most important byproduct of the drop in the value of Chinese shares is that the large middle class which has developed in the country could start to feel pinched. Much of their net worth is based on stock and real estate prices. If these consumers stop consuming, the Chinese economy could take a surprising and profound hit to spending inside the country.

That's a real bear market.

Douglas A. McIntyre is an editor at 247wallst.com.