The recent S&P/ASX 200 rally stalls Monday, partly in response to China's Shanghai Composite Index, which is down 1% amid concern over the long-term outlook for the economy. The speculation is that the Fed's open-ended quantitative easing may continue driving industrial-commodity prices higher, thus increasing hard-landing risks for China as it struggles to cope with weak external demand--and as the government delays any aggressive stimulus measures until after the leadership change this year. "People now see China as 'glass as half-empty,' partly because there's been no major domestic stimulus this year," says Pengana Capital's Tim Schroeders. "The base level of growth in developed economies was higher in the previous downturn, and emerging economies had supercharged growth buoyed by strong export earnings." Schroeders adds: "The export kicker in a lot of these emerging economies is no longer there, because you've had a protracted downturn in the developed world and that's being felt in terms of export demand right through the emerging economies." The S&P/ASX 200 was last up 0.1% at 4395.9.
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