The slow down and confusion in the economy of China resulted in a sharp decline in share markets of Asia and Wall Street. According to experts, since the investors are skeptical about the Chinese economy, they avoided risking their investments in stocks. The American stocks had to face the worst decline since four years due to rapid rush to sell off the stocks triggered by the slowdown in Chinese economy and that too despite a strong employment report last week.
The share prices of technology and industrial companies such as Apple and Boeing that have a significant chunk of their businesses in China fell followed by a decline in stock prices of the miners such as Freeport-McMoRan that supply copper and other minerals to China. Other industries to be affected by the slowdown included the Standard & Poor’s 500 that fell by 1.1%. The Nasdaq composite and the Dow Jones industrial average both dropped by 1%.
Tokyo absence hampers liquidity availability
The Tokyo Sensex is closed for holiday, and its absence hampered the availability of liquidity in the international trading market making the overall scenario more volatile. The Currency markets also showed a lot of upheaval with the prices of randZAR=D3 of South Africa wildly swinging to record its lowest level before bouncing back. The overall Asian shares touched their lowest as the doubts regarding the ability of Beijing to manage the Chinese economy continued.
The Shanghai Composite Index (SCI) dropped down by 2.4% whereas the Hang Seng declined by 2.5%. S&P/ASX 200 of Sydney dropped by 1.2%, and Kospi of Seoul fell by 1%. The Indian Sensex dropped down by 0.7% followed by a major decline in the Singapore, Jakarta and New Zealand stock markets.
According to analysts, although the stocks from China rebounded, it was mainly because the ‘National Team’ a group of state entities bought some of the shares. The National Team has the responsibility of shoring up the share prices.