With all the media buildup leading up to the Olympic Games in Beijing this past summer, just about everyone and their brother was bullish on the China/India emerging market theme.
"Chindia," as it was coined, was supposed to be the next great economic wonder.
The belief that these markets did not need American demand swept international investment circles. Forecasts of double-digit GDP growth continuing for the next several years became the mantra of emerging market funds, and Wall Street analysts got caught up in the commodity bubble, which burst a month before the Olympic torch was lit.
The widely held belief of global economists was that these two sleeping giant economies would lap America in a matter of a few years, as per all the economic extrapolations and white papers published leading up to the Summer Games.
Stocks like Baidu.com (NASDAQ: BIDU), China Mobil (NYSE: CHL), China Life (NYSE: LFC), Huaneng Power (NYSE: HNP), PetroChina (NYSE: PTR), Infosys (NASDAQ: INFY) and Reliance Industries (not listed) seemed bulletproof given the revenue and earnings models being floated by the Chindia bulls.
Long story short, China and India's stock markets topped out in late 2007, well ahead of the Olympics, and both markets fell by more than 70% from peak to trough.
For 2008, the high of the year for both countries' stock markets was Jan. 2, 2008, the first day of trading for the year.
It's been all downhill since, with both markets bottoming out in November, despite a nice short-covering rally like we saw in the United States. Now both markets are trading in a sideways pattern searching for direction as China and India's economies show further signs of contraction.
The "Chindia" experience peaked in Beijing with Michael Phelps, and the market knew it would a year and a day before the Closing Ceremonies.
Bryan Perry is a contributor to OptionsZone.com.
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