So Greece has essentially left the Eurozone and shockwaves are being felt throughout Europe as a result, but let’s not forget about China. In the past month, China’s stock market has dropped 26 percent and is showing signs of a classic financial bubble.
“A free fall in the Chinese stock market could threaten the prosperity of the world’s second-largest economy and have long-term effects of its own.”
Obviously, this is frightening for the world’s economy, and the Chinese government is currently freaking out.
“Stock investing has become a middle-class pastime in China in recent years, and it’s clear the Chinese government is nervous that a continued market rout will wipe out its citizens’ wealth and stoke discord. The Chinese government has pulled out a series of policy measures to try to avert the collapse: interest rate cuts; using government pension funds to prop up the market; announcing plans to investigate those betting on a market drop.”
However, the data shows that because of the remarkable 151 percent rise in the Chinese market last year, a fall is expected and still a huge improvement from where last year’s market began.
“‘The Chinese stock market has dropped 26 percent in a month’ is scary. ‘The Chinese stock market is up 83 percent over the last year’ sounds great. Both are true.”
The NYTimes article’s graphs and in depth explanations reassures us that this drop isn’t unprecedented and the end of the world, but it should still be monitored. We’ll stay updated for you!
