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ASIAN STOCK MARKETS have tumbled again this morning as a collapse in Chinese shares began to contaminate other markets, and after European leaders slapped Greece with a deadline to submit fresh bailout reform proposals.
With markets buffeted by two global crises, traders ran for the cover of investments considered safe in times of upheaval such as the yen.
Shanghai plunged almost 7% and Hong Kong lost 4.74% soon after opening, despite Chinese leaders announcing fresh measures to staunch a correction that has wiped trillions off the country’s markets.
By late afternoon both were down in the region of 5%.
The South China Morning Post reports that 51 per cent of mainland Chinese stocks have asked for voluntary suspensions from trade.
Most other regional markets – Toyko, Seoul, and Sydney – were also hit by the spillover effects, with many hosting companies with links to China.
“China’s stock market rout is now spreading to other financial markets, creating a sweeping sense of panic and liquidity crunch,” said Zheng Ge, an analyst at Wanda Futures Co.
Shanghai is down more than 30% from its closing peak on June 12, when it had risen by more than 150% in 12 months in a borrowing-fuelled frenzy enhanced by hopes for economy-boosting government measures.
However, analysts said new restrictions on margin trading and concerns about the overvaluation of many stocks have forced mainland investors — mostly individual retail traders — to cash out.
There are now fears that the hammering to stock markets will hit the wider Chinese economy, the world’s second biggest, which is already struggling with slowing growth.
Wednesday’s falls came despite the government announcing new measures to support the market.
Alex Wong, Hong Kong-based asset-management director at Ample Capital, added:
Gradually this will drag other markets lower because the magnitude of a China crisis would be far bigger than anything happening in Greece.
- © AFP, 2015, additional reporting by Business Insider.
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This has been coming for a good while. I can’t understand why these things are only reported in the mainstream media when it all starts falling apart. China has been building non stop for years, buildings that are sitting empty all over the country. This has been fueled and driven by the Chinese government due to so many of the population depending on jobs in the steel industry which is run by the state. To keep the people happy and in jobs the government kept the building boom going, borrowing amounts I can’t even write here as the figures go way beyond my comprhension. I worked in Hong Kong and on the mainland before the boom and witnessed poverty that was shocking. The more freedom the people got the more government worked to keep people happy regardless of the consequences. All this on top of massive corruption, building projects that created whole new cities and towns with crazy ambitions of state of the art railways that will never be used, expensive apartments no one can afford and so remain empty, hugh shopping centers that will never see a customer etc etc. All done on borrowed money or money that never existed in the first place. How do I get this with very little understanding of economics yet the people who were supposed to seemed to have no idea or did and ignored it. When, not if China goes bust it will be a world changer.
A government that tries to keep people happy? Sounds like hell.
Happiness at what price?
That is the problem with political financial meddling on the whim of the public.
The public perception is easily swayed. It happened here with mortgage borrowing when the public put pressure on larger mortgages. People here blame the banks for it all but it was the people
This crash is being fueled by incredibly reckless gambling (mostly by individuals) on the Chinese stock market. I’m not saying this can’t spread to the rest of the economy but to suggest it is being driven by infrastructure projects is a nonsense (the high speed rail network is used), this crash has been caused by ridiculously naive investments by a huge number (I’m talking millions) of individual Chinese gamblers.
I honestly believe all this new technology that is doing work that people used to do and so putting people out of work is the big issue. A world population that is becoming obsolete like that old washing machine. But unlike that old washing machine people still have to be fed and housed and this is falling on the countries to support these people. These companies making billions on this technology are slowly making US irrelevant. And even though they’re making all this money they are getting their products made in the cheapest markets. Population is growing and people are living longer but there isn’t anything for us to do. I think somewhere soon the world is going to have to reset and begin again somehow. At this rate everything will be done by a machine in 50 years time. That’s very scary stuff.
I beg to differ… http://m.ft.com/cms/s/0/f38e08ce-0e84-11e0-b9f1-00144feabdc0.html “Some local governments are literally digging holes and then filling them in to ratchet up the GDP,” Mr Yu wrote. “Consequently, there are simply too many luxurious condominiums, magnificent government office buildings and soaring skyscrapers.”
I need to pay to read your link. Yes, there are systemic problems in the government incentive structure in China. No, this isn’t linked to the current crash. Go to r/China or any expat forum and they have been calling this for months. Anyone with a bit of financial sense on the ground in the mainland saw this coming two months ago. This guy fixes bikes for a living and called it on April 23rd: http://youtu.be/YuD9hdK0yyw
Chinese stocks are only worth 30% of GDP, as opposed to the US/Uk etc where they are typically worth 100% of GDP.
This is technically a crash, but the fallout will be lessened by 2 things;
1. % of GDP less than in the West
2. Many of the indices are up over 100% over year start, even with the 30% drop in the last month.
Everyone and his uncle knows the Chinese government manipulate the stock market, the property market, imports and growth figures. They also make plays on commodities that interest them.
The only thing they can’t manipulate are actual sales of their exports and that’s the one thing that sustains them at the end of the day.
This will hit Oz
If you read the article it already has
The wizard can take care of it.
You’re not in Kansas anymore, Dorothy!
why did the birds leave seahorse?
150% rise in last 12 months. The banks are at it again. Overheated.com
It will hit the world China is a superpower they technically own most or the U.S. Debt they gonna be calling in their depths soon so America will suffers so the two superpowers In the world on collapse yes the world should be worried! Big crash on the way!
China is technically not a superpower. look up definition of superpower. also you can’t just call in debts. things like that are fixed over period of time. but anyway… yawn
Plus china don’t own as much of the debt as people have said when you actually look at. China owe the US a lot of money too and it cancels out much of it.
China will have a slowdown and that is the best we can hope for but its lost trillions in the last few weeks and tens of millions of people have had their savings wiped out.
The 2nd largest economy doesn’t have a stock market crash like this without global impact.
The Eurozone is such a waste of space at this stage that it will not take much to knock it out.
other thing the yen is not a reserve currency so the fall out is more limited. the dollar is the foremost reserve currency do as we found out they go pop so does the world. where the problem does lay is China is leader in manufacturing. cheap components would have knock on for sure but china’s loss is indias gain
If China crashes a Greek default wont meet diddly squat.
If China crashes it will knock Global growth for a few years.
We’ll see how the EU’s extend and pretend and austerity cuts was the wrong plan.
The Eurozone could be going in to a recession with out having come out of the effects of 2008. The only part of the world still stuck there.
That is a fu k up of monumental proportions, with probably historical consequences.
It may roll in and right over stocks and bonds in Europe
Of course we dont rely on bond markets at all do we Enda
Some people are so giddy at the thought of the USA collapsing they can’t face the fact’s it would f*** us all up. China makes most of the world’s goods and the western world has cut back on spending since the collapse. The OZ mine production could well shut down now. Hopefully this ain’t the start of a another hard fall.
I dont think anyone is giddy its just the fact that the media and political figures have completely ignored the facts for so long now. Even with Greece they cant grasp the reality that Greece cannot pay.
Too many in Europe believe their own propaganda that Greece is the reason that the Eurozone is doing so well.
It is like saying that Mullingar’s poor performance economically in 2007 caused the Irish collapse.
I am more referring to posters on this forum who have a hate for all things USA and would love nothing more for it to collapse into itself. The ironic thing is I fail to see how having someone like China or Russia as the number 1 superpower would be of any benefit to us….things would get so much worse.
God help America !
God save America
Sum Ting Wong
Ho Lee Chit
They’ve been talking about this on Bloomberg for months. Chinese stocks have been in a growing bubble for years with artifical values propped up an excess of cheap credit and promises of reform rather than any real value. I’m in the mining and metals sector and the iron mining industry was absolutely battered when the Chinese growth slowed down, they consume 80% of the world’s steel, the writing’s on the wall. This is a ticking time bomb and it’s going to be much worse than 2008.
“Winter is coming Noonan”
Is the Chinese bubble burst?
If china goes the knock on effect will make the 2008 crash look like fender bender
Maybe Alex got it Wong.
Nows the time to scrap money. Everyone keep calm and keep doin what you’re doing. Except bankers, they can get nice jobs tending the parks and gardens. Sorted
The China syndrome is like a global Minotaur that will eat us all
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