Market Panic Goes Global With $828 Billion Equity Rout in China – Dow Jones Goes Down Over 500 Points
The Obama “recovery” (which was never really a recovery, just a papering over of our economic problems with debt and manipulation of the financial system) appears like it is starting to come unwound.
The sudden falls in the US stock market has created global shockwaves, and none of those shockwaves has been greater than the one in China, where they experienced an eye-popping $828 billion rout in equities:
The country’s currency was their latest favorite to succumb to a rout that has roiled financial markets around the world this week, losing as much as 1.2 percent on Thursday for the biggest decline since the aftermath of its 2015 shock devaluation. That follows a selloff in large caps and banks that has wiped out about $828 billion from the value of Chinese equities.
Traders are running out of places to hide in a nation where market declines have a habit of snowballing. Government bonds are offering little in the way of comfort, and even commodities are feeling the squeeze. Making matters worse is the prospect of seasonally tighter liquidity ahead of the Lunar New Year holiday, ccording Oanda Corp.’s Stephen Innes.
“People are aggressively taking profit,” said Innes, Asia Pacific head of trading at Oanda in Singapore. “They just want to unwind risk and take cash. The slide of Chinese equities in the past few days has definitely had an impact on the currency.”
Investors are continuing to flee risk around the world despite calls to buy the dip. The selloff is testing the resolve of China’s “national team,” as state-backed funds are called, to step in to keep markets stable. But signs of buying have been few and far between, with the Shanghai index set to suffer its first so-called correction in 743 days, the longest such streak in history. It dropped as much as 4.3 percent on Friday.
When people talk about easy money and how much the Feds have made/printed in the USA, you should consider that the Chinese have been spending five times as much as we have.