Markets have focused on the sudden drops in the Dow Jones Industrial Average and the Shanghai composite index. For many, the Dow fall had a benign inevitably — no need to panic. The fall in the Shanghai market, however, was seen as a warning sign, but it could actually turn into a fresh opportunity.
The Dow retreat, high-to-low, was a little over 12 percent. Let us call the move past 10 percent an overshoot, so this retreat is seen as a correction rather than a trend change.
The Shanghai index decline was 14 percent. Given the higher level of background volatility in the Shanghai market, it's fair to call the move past 10 percent an overshoot.
But that is where similarities end. The fall in the Shanghai market is not the same as the fall in the Dow, although the increasing exposure to, and integration into the global financial system has exacerbated the fall.