On Monday the Shanghai Composite Index closed at 3,296, a mere 25 points above the 52-week low. It seems likely that the Index will break 3,271 very soon, possibly tonight. Coming a matter of weeks ahead of the Beijing Olympics, this cannot be considered a good omen for the Chinese people or their economy.

We advise extreme caution with Chinese stocks and reiterate our short recommendations on FXI, JRJC and BIDU.