Business News

China’s Black Monday causes panic amongst world’s global investors

By Business & Finance
25 August 2015
foreign markets

China stocks fell almost 9% yesterday in the worst single-day trading session since 2007, but most Asian regions have been less affected.

Monday, August 24th – now referred to as Black Monday in financial circles – was a day of chaos for world stock markets as investors panicked about the outlook for global growth.

China is the world’s second-largest economy and the state of its markets has a far-reaching effect on world markets.

Global investors are worried that China’s economy is growing at a much slower pace than Beijing’s 7% target for 2015 as economic growth falters.

The pan-European FTSEurofirst 300 index is set course for its biggest monthly loss since 2002, after falling over 10% in August to date.

The Iseq index of Irish shares dropped by 5% on Monday and other major markets fell by similar amounts.

It is thought that this crisis will not have the similar catastrophic effect of the financial crisis of 2007-2008 and a continued deceleration, rather than a crash, is expected for Chinese markets.

However, the full scale of its impact is not yet known. Zhou Lin, an analyst at Huatai Securities said: “Global investors are cannibalising each other. Calling it a market disaster is not an overstatement. The mood of panic is dominating the market … and I don’t see any signs of meaningful government intervention.”

Emerging markets expert at Rabobank Piotr Matys commented: “We are seeing signs of relief with European stocks opening higher despite China extending its losses. We are trying to decouple but I think it’s too early to declare the worst is over though and we are out of the woods.”