CHINA: THE GREAT STOCK MARKET CRASH

As if the Greek crisis was not enough to rattle the financial markets. Volatile Wednesday saw the Shanghai Composite Index tumble 3% on opening and then recover what it had lost in a couple of hours before crashing again by as much as 8%. The Shanghai Index has shed a scary 32% from its June 12 high wiping out $3 trillion of investors' wealth. The tech-heavy Shenzen Index which is likened to the US's Nasdaq lost a mind-boggling 40% in the same period. More than 50% of China's traded companies on the stock exchanges halted trading activities as shares witnessed wild see-saw movements on the bourses.
The Chinese Government is on a war-footing to avert a further collapse and somehow shore up share prices.The Government-run China's Securities Finance Corporation (CSF) has pledged to lend billions to major brokerage houses to buy more stocks from the market in order to stem the selling pressure. 
Investors, though, are not comforted by the government's measures. At the root of the crash is weak data emanating from China's economic growth that has been the slowest in a decade.Corporate growth and profits were lower this year and the inflated value of stocks got way ahead of reality.
There's a general feeling among investors that the Chinese equity bubble may have burst. The Shenzen collapse is not very dissimilar to the Nasdaq when the American index crashed 41% in 10 months from its March 2010 peak.
Other similar emerging market meltdowns in recent times are that of Argentina where the bourse collapsed 40% in the October-December period of 2014. Turkey is another where markets shaved of 32% in mid-2013 following a currency crisis.
The Shanghai composite meanwhile has recovered sharply on Thursday to close at 5.7% gains over previous day's low, aided by government-backed measures. How long the bounce back sustains remains to be seen especially in the light of weakening economic fundamentals.

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