By Jeremy Gaunt, European Investment Correpondent
LONDON, Aug 19 (Reuters) - Chinese stocks have hit bear market territory, falling more than 20 percent from their most recent peak, and sent shivers across many global financial markets -- but remember, it's August.
So before investors read too much into the fall, or try to extrapolate new trends in anything financial from Shanghai to Wall Street, take a look at the volumes.
While plenty of things can -- and do -- happen in what is supposed to be the height of the northern hemisphere's summer, they are often skewed by the fact that it is holiday time for many of the world's investors.
In much of Europe, for example, you are probably more likely to get an answering machine announcing an absence until September as you are to get a strategist, trader or analyst on the line.
"It's the holiday season and the Weekly Strategy Report will also be taking a break and will return on 7 September," one regular market note announced on Monday, not, it must be said, without a tone of elation.
This has a number of impacts on markets.
For one thing, when trading is thin, moves can be highly exaggerated. The fewer buyers or sellers, the less competition for assets.
But even if they are not exaggerated, what you can glean from August moves is often not that useful.
"The prices contain less information because there are fewer people expressing views," said Andrew Clare, professor of asset management at London's Cass Business School.
THIN VOLUMES
So how thin is trading at the moment?
Reuters data shows volumes for the Dow Jones industrial average for the full day on Tuesday were only 56 percent of the index's 90-day average daily volume. They were higher for the Nasdaq, but still only 73 percent of the norm.
In Europe, the FTSEurofirst 300 volume was 69 percent of its daily average on Tuesday, while on Wednesday it looked likely to be even thinner -- it was at less than 40 percent with a little more than two hours to go.
As for China, where the Shanghai Composite Index has fallen more than 18 percent this month, volumes have mostly been less than half what they were in July, especially in the past eight trading sessions.
It is harder to gauge volumes for other assets -- foreign exchange trading data, for example, tends to come with a lag, from central banks -- but anecdotally, particpants say it has also been thin.
"When I talk to my support traders, they say it is very quiet, very thin," said Simon Smollett, an options specialist at Calyon.
He said some short-term currency options prices had been falling over the summer in a manner that suggested "reduced volumes and reduced activity".
Given this, investors might be better off waiting until September to see what is really happening to financial assets.
But Cass's Clare suggests that early Septenber may also be too soon.
"Even then it takes time to ramp up, people coming back to their desks to think about strategies," he said. "Late September."
(Editing by Stephen Nisbet)