Daniel Halliday
Apr 19 · Last update 3 mo. ago.
What caused the 2015-2016 Chinese stock market crash?
2015 and 2016 were turbulent years for the Shanghai Stock Exchange (SSE), dropping 30% in value from mid-June to July 2015. On the 24th August of the same year the Shanghai index fell a further 8% in what came to be known as “Black Monday” and continued declining into 2016 prompting a global stock market sell-off and a halt to SSE trading in January 2016. What were the causes of this melt-down and what significance does it have in regard to the subsequent US/China trade war, the recent reduced growth forecast and the IMF’s increase of this forecast this month? bloomberg.com/quote/SHCOMP:IND
Stats of Viewpoints
China is becoming a global economic weak link
0 agrees
0 disagrees
A bubble that needed to burst
0 agrees
0 disagrees
Viewpoints
Add New Viewpoint
China is becoming a global economic weak link

From before the 2015-16 stock market crash Chinese regulator's interventions have been troubling, allowing widespread margin trading with borrowed money to cause the bubble in the first place. China, wary of further downturns or social unrest, then encouraged state owned enterprises to purchase more stocks to prop up the market rather than allow a controlled price correction. This is only made more worrying by big ongoing issues of economic international relations surrounding Chinese companies stealing intellectual property internationally, China’s engaging in risky unrealistic investments internationally and the China-US trade war. Despite the IMF trying to assure and be positive about it, this economic environment could represent an unstable or unsustainable future for the country.

marketwatch.com/story/let-chinas-bubble-burst-2015-07-29

Agree
Disagree
A bubble that needed to burst

A stock market bubble was a major cause of the 2015-2016 financial trouble in China, but one that is largely seen as necessary to burst and normal for a young economy. This bubble was inflated due to changes in trading regulations allowing margin trading, and an encouragement of investors purchasing stock using borrowed money. In addition the Chinese Purchasing Managers’ Index, a measure of national manufacturing activity, fell in 2015 indicating a slowing in Chinese manufacturing prompting a selling frenzy in 2016. However the Chinese economy remains one that is hard to read and divergent from the stock exchange, making financial bubbles more likely but less indicative of real economic disaster. China recent sheepish growth forecasts demonstrates the governments dedication to address these issues, as China transitions toward a more service based economy.

bbc.com/news/av/business-34036870/what-has-led-to-china-s-stock-market-crash project-syndicate.org/commentary/why-china-is-not-collapsing-by-anatole-kaletsky-2015-10?barrier=accesspaylog theguardian.com/world/2016/jan/01/slowdown-in-chinese-manufacturing-deepens-fears-for-economy

Agree
Disagree
Translate