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Meanwhile, in China

Wednesday, 8 July, 2015

The world is worried about Greece becoming a Cuba on the Med, with ouzo instead of rum and olives in place of bananas, but there’s an even bigger problem on the horizon: China. The rout in Shanghai is far more troubling than the drama in Athens. Consider:

“A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of ‘monstrous’ public disorder. . . . In an extraordinary move, the People’s Bank of China has begun lending money to investors to buy shares in the flailing market.”

That’s from a report filed Down Under yesterday titled Chinese chaos worse than Greece. In an echo of 1929, the writer notes: “Underscoring growing jitters amid the three-week sell-off, police in Beijing detained a man on Sunday for allegedly spreading a rumour online that a person jumped to their death in the city’s financial district due to China’s precarious stock markets.”

Today, those “precarious stock markets” have moved into the danger zone and the air is filled with talk of China’s “Black Wednesday”. The Sydney Morning Herald has a rolling blog on the situation titled, rather worryingly, China panic grows. Snippets:

“Losses on the ASX have accelerated again on the early slump in Shanghai, and the Aussie dollar just hit its next six-year low, showing that the Chinese turmoil is starting to affect local investor sentiment.”

“China’s securities regulator says “panic sentiment” has set in mainland sharemarkets, contributing to an ‘irrational’ sell-off that has defied the government’s urgent attempts to stem the market freefall.”

“I’ve never seen this kind of slump before. I don’t think anyone has. Liquidity is totally depleted,” said Du Changchun, an analyst at Northeast Securities.”

Update: The SMH blog is now titled “China panic spreads”. It’s a “developing story”.


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