So much for hopes for a bit of stability in the market! There's talk that Beijing might be backing away from intervening in the market so maybe a few people are running scared. It does look a bit messy at the moment though. What we don't want is contagion. Hong Kong sold off 3% as well.
Dalio and Bridgewater have gotten out of China totally. http://www.businessinsider.com/bridgewater-associates-ray-dalio-note-china-2015-7
These charts give a little bit of context to the drop. They suggest to me that the value was mondo inflated, and that Beijing sucks at playing "stock market" as if it is a video game designed to let them win. Reality has come to visit the Chinese stock market, and will be staying for a while.
I thought this article was an unusually sensible summary of what is currently going on in China. Or at least is says a lot of things that I had begun to suspect after looking at the more alarmist reports that tracked every wobble of the market and gave almost no larger context: http://www.cbsnews.com/news/5-reasons-not-to-sweat-chinas-stock-swoon/ I mean, what is happening in China is interesting and everything--but is it any kind of game changing event for foreign (non-Chinese) investors? Probably not.
I would only partly agree with the article, to be honest. It's true that it's difficult to buy most stocks directly but it is easy to buy H-share / S-share equivalents of a lot of the stocks on the Hong Kong or Singapore markets. This can help with contagion. Plus, it's easy to buy an ETF. Yes, the market crashed before and rebounded but that said same ETF I bought back in 2007 was dead money for a little too long (admittedly, my own fault). It's true that the economy isn't the market, but that's the charm and curse - the market was a graveyard for 6+ years while the economy was growing at 7-10% p.a. during that time. And most investors on the mainland don't traditionally have many investment outlets. Their main alternative? The housing market...I'll say no more on that one. But they're right to say that it is isolated at the moment, and local investors looking to avoid the market may actually be a boon for real estate in places like New York and London. At the same time, Thailand is an even smaller market and if I'm not mistaken that market was the trigger for the Asian financial crisis.
China's volatility isn't such a bad thing if you're day trading, but it's a nightmare if you're in there with a long-term position. Plus, as I think some here are hinting at, China's exchange works to different rules than most other stock markets. Which, again, can be a good thing or a bad thing, depending on how you're playing it.
It seems like markets overseas do have a direct impact on our stock market in the US as wll as others in the world, so anything dramatic in China is bound to be reflected in the U.S> stock exchange in one way or another.
That's probably because many U.S companies operate in China so indirectly though it is, whatever is happening in China [when this companies take a hit (it)] will negatively impact these companies back home.
http://www.bloomberg.com/news/artic...s-global-as-jen-sees-risk-of-50-loss-on-china A former IMF economist suggests there is significant pain yet to come in currency wars around the globe. I offer it as food for thought, as I am not knowledgeable enough to offer an opinion. HTH.
The yuan has hit a 4 year low, as described by a daily in Shanghai. http://www.shanghaidaily.com/busine...r-low-on-2nd-day-of-devaluation/shdaily.shtml