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Global stocks sell-off deepens as panic grips markets - live Global stocks sell-off deepens as panic grips markets - live
(34 minutes later)
1.23pm AEST04:23
For a good summary of where we’re at across the region today, my colleague Justin McCurry has sent this dispatch from Tokyo. here’s how he starts:
Fears of a slowdown in the Chinese economy sent Asia-Pacific stocks plummeting on Monday, days after Wall Street suffered its biggest one-day loss in almost four years.
1.20pm AEST04:20
Worth remembering though that the Chinese stock market had risen a massive 150% in the past 18 months. In that context a drop of 30% in the past couple of months is nothing to be worried about.
After all, the optimists say, the country is still growing by as much as 7% (maybe 4% if you don’t believe the figures), the service sector is beginning to make up for an admittedly weakening manufacturing sector and there are still millions of people to bring out of poverty.
As the American economist Nicholas Lardy told the Australian:
The sceptics have taken insufficient notice of China’s progress in transitioning to its new model of economic growth, one less dependent on expanding industrial output, investment, and exports and more dependent on expanding private consumption expenditure.
1.06pm AEST04:06
'There's no good news'
An analyst in Shanghai, Qi Yifeng, at consultancy CEBM, put it quite pithily to Reuters.
The market is in a downtrend. There’s no good news, stocks are still expensive, and there’s no fresh money coming in. With no RRR (reserve requirement) cut over the weekend, the market will directly head south.
1.04pm AEST04:04
After starting to devalue the yuan two weeks caused further selling on its main stock exchanges, investors expected Beijing to introduce some more calming measures at the weekend.
But despite new rules allowing pension funds to invest in the stock market – quite a good idea on the face of it and another step towards reforming the financial system in China – the market has been sold heavily today and is currently down 7.92%.
12.53pm AEST03:53
Seems sensible to look first in more depth at what’s happening in China this morning given that most people agree that’s where the problems are stemming from.
For an expert analysis of the background I can point you to the Guardian’s own economics brains trust of Larry Elliott and Philip Inman who wrote at the weekend about how concerns about China’s slowing economy will spread to other emerging markets. Here’s a snippett.
The problem is a relatively simple one. In the post-Great Recession world, the tendency has been for all countries to try to export their way out of trouble. But this model works only if the exports can find a home, as they did when China was growing at double-digit rates.
But in the past 18 months, the Chinese economy has slowed, causing problems for two distinct groups of emerging-market economies – the east Asian countries that sell components and finished goods to their big neighbour, and countries that supply China with the fuel and raw materials to keep its industrial machine going.
12.46pm AEST03:4612.46pm AEST03:46
SummarySummary
It’s pretty grim out there so I’ll set out the main points so far:It’s pretty grim out there so I’ll set out the main points so far:
Hold on to those hats.Hold on to those hats.
12.36pm AEST03:3612.36pm AEST03:36
Global rout intensifiesGlobal rout intensifies
Good afternoon and welcome to the markets live blog. It’s been a very lively morning across the Asia Pacific region following on from last week’s China-inspired heavy selling here and on Wall Street and in Europe on Friday.Good afternoon and welcome to the markets live blog. It’s been a very lively morning across the Asia Pacific region following on from last week’s China-inspired heavy selling here and on Wall Street and in Europe on Friday.
Stock markets, commodities and currencies are being smashed.Stock markets, commodities and currencies are being smashed.