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Markets Plummet Worldwide after Chinese Stocks Take a Big Hit
Chinese stocks slumped 9 percent Tuesday, pushing other markets down. China’s surprisingly weak economic data fanned fears that the economy may be more volatile than widely thought. Whether this Asian flu will spread to the rest of the world is still unclear.
China’s stocks hit their 10-year lowest on Tuesday as Shanghai and Shenzhen 300 plunged 9.2 percent and Shanghai Composite dropped 8.8 percent.
After Shanghai Composite passed the 3,000 milestone on Monday, China’s stock markets reversed course drastically on Tuesday, cutting the capitalization of the Chinese stock market by $140 billion.
The sell-off followed reports that the China Securities Regulatory Commission is going to look closer at supposedly bullish market players.
The plunge in Chinese stocks had global reverberations. Standard and Poor’s 500 stock index and the Dow Jones industrial averages fell 3 percent. The Istanbul Stock Exchange dropped 4.5 percent, the DAX shed 3 percent and Russia’s RTS closed 3.3 percent down.
Many have cautioned for months that China’s volatile market, which has been soaring almost nonstop for more than a year, appeared vulnerable, particularly after reaching all-time highs. “The Chinese market has been moving up too quickly,” Alexander Krapivko, an asset manager at Renaissance Capital, told Kommersant. “It’s time to blow off this bubble a little.”
However, it is too early to tell whether the decline is constitutes a healthy correction in China or opens a broader collapse.
www.kommersant.com
All the Article in Russian as of Feb. 28, 2007
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