Wall Street the follower? (#347, Topic M)

The four newspapers I regularly read cover yesterday's "meltdown" in the Shanghai Stock Exchange (#346) somewhat differently. The lead story in today's New York Times does it comprehensively -- showing major stock exchanges' movements in chart form over a 30-hour time period, beginning with the Tokyo Stock Exchange (opening at 8 pm EST 2/25 Monday = 9 am 2/26 Tuesday, local time), down by less than 1%; continuing with SSE (opening at 8:30 pm EST 2/25 = 9:30 am 2/26, Shanghai time), down by 8.8%; then with Europe's and Brazil's, down by 3% and 6.6%, respectively; and ending with the Wall Street, with the Dow Jones Industrial Average down by 3.3%. The Washington Post does it dramatically, with a 4-column headline: "Stock Sell-Off in China Hits Wall Street," and a 15" x 7" chart, in red, on the front page of its Business section, showing detailed movements of the DJIA from Monday's close (12, 632.26) to 12,500 (at 9:30 am), to 12,450 (at about 12:15 pm), to 12,350 (at about 2:15 pm), to below 12,100 minutes before 3 pm (WP gives no specifics, but 2/27's low, reached at that time, was 12,086,86), to 12,216.24 at close. The Wall Street Journal does it analytically, showing two versions of the DJIA in graphic form, one official, and the other recalculated (to adjust for computer delays from 2 pm to 3:30 pm); it covers the story more cautiously: "Market's Slide Spotlights Risks." Invetor's Business Daily covers it sensationally; its headline "China Triggers Global Sell-Off" and an accompanying graph, captioned "Asian Contagion Revisited," seem to attribute every ill to China. Given IBD's editorial stance, this is understandable. What is puzzling to me is a second story by NYT's Shanghai correspondent. Labeling investors in Shanghai as naive, the correspondent cited reasons, such as (1) out of 15 initial public offerings in 2006, 12 had appreciation of 10% or more by yearend, and (2) when a company's CEO was under investigation, its stock went higher. Really. When reading it, I cannot help asking myself: Are there similar phenomena on Wall Street? According to IBD (1/2/07 issue), there were 198 IPOs in USA in 2006: "Restaurant chain Chipostle Mexican Grille started things with a bang in January, doubling on its first day and more than tripling by early May." MasterCard, Crocs, and J. Crew "are still trading at more than double their initial price." On the second point, if my memory serves me, a week or so ago, the CEO of a home-improvement chain in US resigned (along with a retirement package worth more than $200 million), and its stock went up by more than 15%. So, what is new? In any case, today, the price on the SSE rebounds with an increase of 3.8%, and DJIA follows suit with an increase of 52.39 points, or 0.4%. It seems that the Wall Street no longer leads, but follows the Chinese financial markets instead. We'll see what tomorrow holds.