Every pseudo-economist-nerve of mine tells me that one day China inevitably will crash and when it happens it will hurt us all.
But please, enough with the nitpicking in search of ideology affirmation.
Why this is not the crash everybody's waiting for? It's a stock market that is about to crash-out it's volume that was gathered just months prior. Not enough time for most of the worlds shareholders to incorporate Chinese prices into their portfolios.
The Chinese stockmarket's prior boom was mainly driven by the HK-SH stock-market link, allowing foreign investors to buy Chinese stock. Combine that with
- the assumption of risk-takers that the world would flock in gazillions to buy Chinese stock
- and the lack of investment options the ordinary Chinese people have to put their savings in
and you got your self a little bubble going.
But that bust (which is not close to eliminate the prior gains yet, btw) is not the bust we're rightly fearing. Not every economic accomplishment of China can be discredited just by the immorality of its leadership.
That bust could set off a domino chain reaction, which is why the leadership is so desperately and shamelessly trying to prop it up. There aren't many other signs of optimism for the "new normal", and I'm a bit worried about what will happen next.
Every crisis starts in the same way: it is called a bubble because everybody thinks that things are going so well, and they will probably continue the same for a long time. I think China investors are in this complacency bubble, and they are probably coming to a rough awakening.
Every pseudo-economist-nerve of mine tells me that one day China inevitably will crash and when it happens it will hurt us all.
But please, enough with the nitpicking in search of ideology affirmation.
Why this is not the crash everybody's waiting for? It's a stock market that is about to crash-out it's volume that was gathered just months prior. Not enough time for most of the worlds shareholders to incorporate Chinese prices into their portfolios.
The Chinese stockmarket's prior boom was mainly driven by the HK-SH stock-market link, allowing foreign investors to buy Chinese stock. Combine that with
- the assumption of risk-takers that the world would flock in gazillions to buy Chinese stock
- and the lack of investment options the ordinary Chinese people have to put their savings in
and you got your self a little bubble going.
But that bust (which is not close to eliminate the prior gains yet, btw) is not the bust we're rightly fearing. Not every economic accomplishment of China can be discredited just by the immorality of its leadership.