The China syndrome
Chinese investors monitoring stock prices at a brokerage house in Beijing. While the prospect of a Grexit has grabbed the headlines recently, a potentially bigger crisis in China could be a greater threat to energy markets. (PA)
China’s stock market has gone into meltdown over the past few weeks, with its value dropping by around a third after months of stellar gains. Until recently, the collapse in stock prices was seen as a normal correction in an overheated bull market, but experts are now talking of looming disaster in the world’s most populous country.
However, after a drop of 8% on 8 July – which analysts have dubbed ‘Black Wednesday’ – Chinese authorities have taken drastic steps to shore up the market. The measures included a ban on anyone holding more than 5% of a company’s stock from selling in the next six months. A plethora of companies have suspended the trading of their shares. These and other measures have staunched the market’s wounds, but there is still profound concern that the rout may resume.