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Shanghai Composite's 'virus' reaches Western markets

Friday, August 21st 2015 - 06:34 UTC
Full article 14 comments
After falling more than 3% on Thursday, China's Shanghai Composite index was down 0.4% at 3,649.07. In Hong Kong, the Hang Seng index dropped 1.8% After falling more than 3% on Thursday, China's Shanghai Composite index was down 0.4% at 3,649.07. In Hong Kong, the Hang Seng index dropped 1.8%
Markets worldwide have become increasingly nervous over prospects for the global economy, especially with signs that the Chinese economy is slowing. Markets worldwide have become increasingly nervous over prospects for the global economy, especially with signs that the Chinese economy is slowing.

Asian stocks saw sharp falls on Friday as mounting concerns over China's slowing economy continued to affect global markets. It follows big falls in US and European markets on Thursday, with the Dow Jones dropping more than 2%.

 After falling more than 3% on Thursday, China's Shanghai Composite index was down 0.4% at 3,649.07. In Hong Kong, the Hang Seng index followed the mainland's trend and was 1.8% lower at 22,355.44.

Asia's largest stock market, Japan's Nikkei 225 index dropped 1.9% to 19,646.04.

The sell-off in Japan stretched across most blue chip stocks, with carmakers Toyota, Nissan, Honda and Mazda all shedding as much as 3% in early trade.

Among the country's technology giants, Sony saw the sharpest drop with shares down by more than 4%.

Markets worldwide have become increasingly nervous over prospects for the global economy, especially with signs that the Chinese economy is slowing.

The devaluation of China's currency, the Yuan, last week took many by surprise, and the Chinese stock market has continued to see big fluctuations despite efforts by Beijing to calm markets.

In South Korea, the Kospi index followed Tokyo's lead, dropping 2% to 1,875.42 with most of the country's main stocks being pulled lower.

Australia's S&P/ASX 200 was also in negative territory, falling 1% to 5,238.60.

Categories: Economy, International.

Top Comments

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  • Skip

    Down down down she goes.

    Aug 21st, 2015 - 11:16 am 0
  • Terence Hill

    Yeah no one is immune.
    “China's economy is sneezing and Australia's catching cold
    The Australian share market plunged deep into the red today. It's on track for its worst month since the global financial crisis. China's surprise decision to de-value its currency last week has fuelled growing concerns about the economic health of Australia's largest trading partner.
    Some analysts are warning China's woes have put it on course for an economic shock like the one experienced in parts of Asia during the late 1990s. But they're cautioning this one could be much, much bigger. ..”
    http://www.abc.net.au/7.30/content/2015/s4298104.htm

    Aug 21st, 2015 - 11:44 am 0
  • Skip

    Terence

    I'll never claim that Australia is recession-proof. No country is. Even China.

    Recessions are good for a country. The nature of a market economy is that it builds up imbalances during growth and recessions allow these to be rectified and difficult reforms palatable to the population.

    We need a recession to reform.

    However we aren't in one and there is no prospect on the immediate horizon. And with the price of iron, coal and other exports hitting rock bottom, Australia is still managing to grow.

    The article says that China's stock market fell 3%, South Korea 2%, Japan 1.8% and Australia only 1%. Not everything that happens in China is being 100% transmitted through the Australian economy.

    China's inevitable economic decline will severely affect Australia but it isn't the only story here. This meme that Australia is only beholden to China for its prosperity is facile. Case in point. In January we exported A$6.5 billion to China. This is much lower than the record A$9.5 billion reached only a year earlier. And China has been trending lower for a year now. And even after 20 years of stagnation we still export roughly A$4 billion per month to Japan. Chinese still need to eat. They still need coal for electricity. Even during a recession. Australian is primed to provide that. Maybe they'll need less of these and even less iron ore; but trade which is already 50% below peak won't drop to zero.

    Just as we survived Japan's boom then bust, we'll survive China's. China's economic model has reached its limit and with its demography falling off a cliff there is no repeat performance possible. Australia however isn't constrained by that. India, Indonesia, Vietnam, Philippines will all go through a Japanese/Chinese style boom too and we're primed to benefit.

    China's economy isn't sneezing, it has pneumonia and everyone is too scared to accept that reality.

    Brazil already has the flu.

    Australia is just catching a cold.

    Aug 21st, 2015 - 01:30 pm 0
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