Why The Power Of Chinese Stocks Has Faded

These effective strategies helped Hong Kong overcome the financial crisis. All these facts fully demonstrated that China is a responsible big country. After the Asia financial crisis, the importance of China's economy has been brought into focus; China's neighboring countries have begun to recognize the influence of the Renminbi.

Nowadays, the prestige of the New York Stock Exchange (NYSE) is clearly attracting a large number of Chinese companies. Commonly, firms such as Alibaba seek to launch initial public offers (IPO) in foreign markets raising the capital that the firm needs to expand its businesses across the globe. Nevertheless, to deal with stock market reactions after an strong debut represents a great challenge for large corporations. Spinal (2014) states that “buying the shares of fundamentally strong companies soon after they hit the public market is fraught with the risk of short-term losses for retail investors”. Certainly, IPO initial returns are profitable, but it is important to consider the dramatically fluctuation that it may face due to volatility and high information asymmetry.

In early 2016, the U.S. stock market experienced its worst two week start in history, experiencing what is known as a correction, which is defined as a decline of at least 10% from recent highs. The major factor behind the correction was fear over the Chinese economy. China worried the world economy when its stock market was performing very poorly. In the summer of 2015, it took weeks for world markets to react to China’s market crashing. However, on January 4, 2016, the world felt the effects of China’s crash almost immediately. News from the private index of Chinese manufacturing data

Moreover, the stock market crash in 1987 was a shock of stability of the financial system, not only because of the substantial price drop but also, we can clearly see that our functioning systems are significantly flawed and can later be perfected for a better future. Therefore, we learnt more than technical flaws, further improvements of our daily systems have to be made for a better

In the beginning of the financial crisis, most people normally will not realize or predict the disaster that is coming. As John Kenneth Galbraith discussed in “The Great Crash 1929,” “only after the market crash were there plausible grounds to suppose that things might now for a long while get a lot worse” (pg. 90). During the Wall Street Crash of 1929, the most destructive stock market crash happened in the United States’ history. There are numerous causes dedicated to this crash, such as, the inequality and the poor regulations of structures. The causes of this 1929 Great Crash are similar to those of the Financial Crisis in 2008. However, the Wall Street Crash of 1929 led to “a longest and deepest economic downturn in the United States’

When the chinese stock market crashed the Us stock market sank 1000 points in one day. This was the biggest drop ever and all as a result of the crash of the shanghai exchange. China had a solution to fix some of these problems. Though they are a communist government they interfered with the exchange like they are a capitalist government to try to fix the problem themselves. A communist government is “A system of government in which the state plans and controls the economy and a single, often authoritarian party holds power, claiming to make progress toward a higher social order in which all goods are equally shared by the people.”and a capitalist government is “closely associated with economic growth, as production and price are determined by the market rather than by governments. Private property rights provide individuals with the freedom to produce goods and services they can sell in the market.”

Financial markets are intertwined into the lives of everybody today. These markets set prices for food, gas, and various other items that people use often. There are even public cable television channels, such as CNBC, that exclusively cover financial markets. The worlds current financial events such as the US debt crisis, and the Federal Reserves’ quantitative easing have caused a rise in the public’s awareness of the financial markets. One of the most feared events in financial markets is a crash. A crash is a very steep drop in price of all securities in that market. Some recent crash events are the financial crisis of 2008, flash crash of May 2010, and August 2011. Flash crashes are a relatively new phenomenon to the markets, and these recent, unprecedented events have brought controversy to one of the newest forms of trading called High Frequency Trading(HFT). HFT is the act of executing millions of dollars worth of trades at sub second speed according to predictive software, or statistical models and algorithms. HFT allows hedge funds, and other types of financial companies the ability to trade in multiple markets faster than ever before. This incredibly broad and super fast ability to trade is one of the main reasons HFT has come under fire as a detrimental form of trading. Some of the controversy that HFT experiences consists of possible involvement in flash crashes and added

Regardless, it has become a popular belief amongst experts that the nation is head towards collapse; pointing to recent events as substantiating evidence. Over the course of 2015, the nation has experienced significant downturn including sinking oil prices, shrinking manufacturing sector, devalued currency, and a plummeting stock market. At the heart of China’s fall are sharp declines in the stock market. Over the month of August 2015, the Nikkei 225 declined almost 12% with a near 9% dive on a single day. The pain extends beyond the stock market. Oil prices, which have been declining for months, reached a six year low this past month with concern from the Chinese stock exchange. Huge losses in the nations stock market triggered global sell offs and the devaluation of the yuan, leading to concerns Chinese demand for oil has decelerated. Perpetuating the slowdown, manufacturing has declined to its lowest level in three years. Contributing to sharp selloffs, the official purchasing manager’s index for August fell to 49.7;

The Chinese economy can be viewed as the cornerstone of the global economy. The current global GDP, measured in purchasing power parity of nearly 60%, as well as current international rate of growth at more than 80%, is primarily accounted for by China and other neighbouring middle-income countries, such as India or Vietnam.[1] These numbers are significant in understanding our global economy, which is widely interconnected through alliances of trade, laws and finance, thereby affecting our daily lives politically, economically, socially and technologically.[2] With recent analysis indicating that China’s growth has declined to about 6.8% by the end of 2015[3], how would a crash in China’s economy affect the global market?

China is the most populated country in the world, and currently has the world’s fastest-growing major economy. It has allowed the country to advance into today’s modern society. The current government structure is a single-party socialist state where communism has prevailed even since 1949. One of the biggest impacts on the country and its markets has been globalisation, which has enabled China to move from a centralised economy to a market based economy. This change in the economic system allowed the GDP to increase by around 10% annually. Consequentially, more than 500 million of its population enjoys a better living standard. In this report we will focus on different aspects of the Chinese market, examining key factors

China’s equity market has been at the epicentre of the weakness in risky asset prices. The irony is that underlying Chinese economic activity has probably improved since last August’s devaluation. The focus of financial markets has, however, been firmly on the torrid deflationary plight of the industrial sector. Despite official denials, devaluation is viewed as a potential policy remedy. Weak currencies are usually bullish for equity markets. Why is this not currently the case for China? Domestic financial conditions have tightened due to the reduction in foreign exchange reserves as the People’s Bank of China (PBoC) attempts to stem capital flight. It appears, therefore, that foreign exchange intervention is not being sterilised by the central bank via money market operations. This has resulted in tighter money market rates and consequently bad for equities. Meanwhile, tighter domestic financial conditions have not yet

The article I chose describes how the Chinese economy copes with its worst economic slow down in 25 years. The article said that the recent figure shows that growth has slowed sharply and deflation set in. The property market has dropped drastically and factory production is at its weakest point science the 2008 global crisis. In the first three months of 2015, GDP grew at "only" 7% year-on-year, which is pretty small compared to the “usual” 9% growth. Growth for 2015 will probably be the weakest in 25 years. Some pessimists said that China’s economy is about to crash after three decades of rapid development. But the article argues that china’s economy is stronger than they thought and is going through a quiet financial revolution.

The 2007 crisis in the US is not an isolated event. It had overarching effect across the globe. Stock markets across the globe collapsed. For instance, stock price in Germany fell by 7%, India by 7%, China by 5.1% in just one day in 2008 .

The amount of debt issued to state-owned industries in China is escalating at levels that are not sustainable. In 2015, the debt was valued at $26.6 trillion, which is significantly higher than what it was valued only a decade ago (Schuman). When debt rises to high levels, it can cause ripple effects throughout an entire country. However, China is important on a global scale and could cause massive destruction throughout many different countries. According to Neil Shearing, a chief emerging markets economist, the debt that China incurs has accumulated too quick to keep up with. The importance of stopping the amount of debt in the country is key to preventing a crisis. Factors that need to be addressed within the country of China are the economy’s reliance on credit, slow economic growth, accounting methods used by Chinese banks, loose bank regulation and the inability of the government to continue to back the debt owed by the country.

Keith Bradsher's article (2012) about weakness at the Chinese export fair in Guangzhou highlights how different macroeconomic variables can affect international business. Bradsher notes that orders from Europe and North America are down for Chinese exporters. While there is disagreement about the exact cause, there is speculation about several variables. Many Western economies have struggled in the past couple of months as their economies have seen a faltering recovery. In addition, the Chinese renminbi is on a long-run appreciation, meaning that the Chinese exporters are starting to see their competitiveness reduced. A third factor is domestic to China, where wages and rents are rising quickly in key manufacturing areas such a Guangdong Province, the area around Shanghai and the Yangtze delta and the area around Beijing. At times, workers and rents are rising more quickly than the yuan is appreciating, setting the course for the long-run appreciation of the currency against the dollar.