The China syndrome overblown
2016 has begun poorly for share markets. As is so often the case these days, the most obvious culprit was China, although there were a few other factors involved in the selloff, including Middle East tensions and a North Korean bomb test. The Chinese share market wasn’t helped by the operation of automatic “circuit breakers”, which kick in when the market falls sharply. Not only do such mechanisms interfere with the market, but they can also precipitate panic selling, exactly what they are designed to offset. Indeed, the Chinese seem to have come to this conclusion, given that the use of the circuit breakers has been suspended. I have said this before: the Chinese share market tells us nothing about anything. But, of course, it’s not the only Chinese factor. There is also cause for concern about the economy and the currency. (VIEW LINK)
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