What are the Consequences of the China Markets decline on Global Financial Markets?
London, UK - 1st September 2009, 19:25 GMT
Dear ATCA Open & Philanthropia Friends
[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]
According to our computing systems, China's Shanghai Composite Index has closed down more than 20% on August 31 from August 4 (year’s high), the common definition of a bear market.
It has been the mi2g Intelligence Unit and ATCA Research and Analysis Wing’s joint view that the unprecedented $1.2 Trillion lending by China’s banks in the first half of this year is unsustainable and it has been lengthening the colossal asset bubble in property and stocks in China like in the case of Japan in the late 1980s. Its ramifications are felt in the global commodity markets – from oil to copper to gold. Further, it has acted as a false prop for the global financial markets by giving the impression of a global recovery, based on high commodities demand, which in reality is a speculation bubble based on leverage caused by China’s easy money policies that are now coming to an end. No wonder the state owned China enterprises are preparing the ground for default on commodity derivatives.
What are the consequences of the China markets decline on global financial markets?
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