I cannot vouch for news.com.au – the source of this article. But it claims to be Australia\’s most-read source of news…and the following story seems pretty well referenced, so I am putting it up for you to see….and to wonder about:
WHILE the world worries about Greece, there\’s an even bigger problem closer to home: China.
A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of “monstrous” public disorder.
“State-owned newspapers have used their strongest language yet, telling people \’not to lose their minds\’ and \’not to bury themselves in horror and anxiety\’. [Our] positive measures will take time to produce results,” writes IG Markets.
“If China does not find support today, the disorder could be monstrous.”
In an extraordinary move, the People\’s Bank of China has begun lending money to investors to buy shares in the flailing market. The Wall Street Journal reports this “liquidity assistance” will be provided to the regulator-owned China Securities Finance Corp, which will lend the money to brokerages, which will in turn lend to investors.
The dramatic intervention marks the first time funds from the central bank have been directed anywhere other than the banks, signalling serious concern from authorities about the crisis.
All short-selling – the practice of betting that stocks will fall – has been banned, and Chinese media has rushed to reassure citizens.
Yesterday, shares in big state companies soared in response to the but many others sank as jittery small investors tried to cut their losses, Associated Press reports. The market benchmark Shanghai Composite closed up 2.4 percent but still was down 27 percent from its June 12 peak.
Experts fear it could turn into a full-blown crash introducing even more uncertainty into global markets as Europe teeters on the edge of a potential eurozone exit by Greece, after Sunday\’s controversial referendum.
Is this really happening?
And if it is, what does it mean for world markets….for the USA market in particular?
I promise to try and keep tabs on this as best I can.
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UPDATE: London\’s Daily Telegraph is now reporting China\’s financial meltdown as well. Read all about it here.
