International

China stocks plunge again as global selloff continues

Published

9 years ago

August 25, 2015

China stocks opened sharply lower on Tuesday, extending a selloff that has unnerved investors around the globe.
The benchmark Shanghai Composite was about 5% lower in morning trading. Losses were sharper on China’s smaller Shenzhen Composite, which shed 6%.
The Shanghai Composite has now declined 42% from its June 12 peak, erasing all gains year to date.
Markets were faring better elsewhere in Asia. After starting the day in the red, Japan’s Nikkei, Australia’s ASX All Ordinaries and Seoul’s KOSPI Composite were all in positive territory.
Turbulence in Asia comes after a very rough Monday for U.S. stocks. Following an unprecedented 1,000-point decline at the open on Monday, the Dow closed with a loss of nearly 600 points.

Three factors continue to weigh on markets:
1. Concerns that China’s economy is slowing faster than analysts had anticipated.
2. Uncertainty over when the U.S. Federal Reserve will raise its benchmark interest rate.
3. The effect of exceedingly cheap oil — crude is now trading below $40, its lowest point in more than six years.
The focus on China has increased in recent days, especially after a key manufacturing index hit a 77-month low.
But many economists say global investors are overreacting to China’s economic risks.
“The collapse of the equity bubble tells us next to nothing about the state of China’s economy,” said Mark Williams, chief Asia economist at Capital Economics. “In fact, recent data have been more positive than the headlines might suggest, with large parts of the economy still looking strong.”
– UKguardian

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