Markets in China plunged overnight. Hong Kong's Hang Seng dropped 5.5% to 23,819. The Shanghai Composite dropped 5.1% to 4,914. Some shares fell much more. China Life (NYSE: LFC) sold off 9.5% and China Petroleum (NYSE: SNP) dropped 9.1%.
Markets in China are nearing a flat-out correction. in the last month, the Hang Seng has dropped about 13% putting it down much more than the S&P 500. The Shanghai Composite is now off about 3% for the period, but that is after moving up over 80% during the previous year.
Much of the wealth of China's middle class is built on the rising value of the stock market and real estate markets there. Any slowdown in the country's GDP which has been rising over 10% a year will probably take the stock market down further. This could lead to a recession in consumer spending in China.
The fall in the stock market also shows how closely China's economy is tied to the US. As chances for a recession grow here it is clear that imports from the world's most populated country could take a big tumble.
The US is not the only country which needs to worry about negative GDP growth.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-21-2008 @ 10:33AM
rich said...
Any country, just like any family, that carriers a huge dept (U.S. Approaching 9 trillion, which would be 30,000. for every man woman child) cannot sustain itself. Our country answer is more dept (800.00) to each american, printed money with no backing......and the freightening thing is the head of the Federal bank backs this ill concieved plan....we are now only seeing the tip of this distructive iceburg................