When a Giant Sneezes
What are the consequences of China’s recent stock market crash — for the Chinese economy and for businesses in the region?
Strictly speaking it wasn’t a stock market crash, more a severe correction. It was overdue and follows the pattern of most stock markets in their nascent years – boom and bust being a feature of herds of people chasing up prices and the savvy few knocking them down. The impact will be felt throughout the region and the world but only for a while.
The main impact will be to strengthen the US dollar as a haven of experience and consistency. Investors will be wary of China for a time and the world’s economy is fragile enough to delay the next rush but not for long. China has now to prove that its stated intention to reduce corruption is working. When it does, the market will overheat again. Watch this race!