A Plunge in China Rattles Markets Across the Globe – The New York Times

This is a balanced, insightful and informative article from the NYT. It’s a must-read. Check it out!

via A Plunge in China Rattles Markets Across the Globe – The New York Times.

It’s now damage limitation time, with attention likely to move to to next week’s meeting of the world’s leading finance ministers. Also attention will again be on the Fed, focusing on the probability of an interest rate rise this year. Just a hint from the Fed could well trigger a reversal on financial markets.

Let me give you a flavor of the NYT article:

In the meantime, there are big questions about whether China’s stock market plunge will make the Chinese economy, the world’s second-largest after that of the United States, even weaker.

Xu Sitao, the chief China economist in the Beijing office of Deloitte, said in a speech in Hong Kong that the effect on the economy could be muted because equities represent only 7 percent of the overall wealth of urban Chinese households, which continue to rely heavily on real estate in their holdings.

Of course, with many of the world’s real estate markets experiencing strong growth, it takes us back to the risk of a rise in interest rates, plus availability of mortgage loans. Attention now likely to shift to policy options.


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