China’s economy is massively shook up, this is not a secret anymore, not since the big China Stock Market crash earlier this year. Many investors have lost faith in China’s capability to rebound, even some major Chinese manufacturers choosing to invest rather in India than expand own facilities locally. Most prominently Foxconn, the major IT technology and handheld devices manufacturer, announced expansion in India that will have Foxconn open 12 manufacturing compounds in India, with further collaborations being announced on a weekly basis. Australia has been tightly connected with the Chinese investors, which ultimately led to the somewhat unexpected tumble, perhaps the biggest drop since the global financial crisis a few years back.
It has been estimated that in one day Australian shares were stripped of almost 40 billion pounds due to the uncertainty and fears that the global markets are on the verge of a new crisis, one that can hit almost anybody. Additional problems and worries by the Greece affair and the consequent instability of the MCU, paired with the announced Tsipras step-down, all culminated in a loss that went throughout the board and ended 4.1 per cent below the point it started with that very same day.
This produced some ripple effect on the Hong Kong and Shanghai indexes, which tumbled because of the Australian scare, where the Shanghai Composite index dropped whole 8.5 per cent at some point. Although it is expected that the Chinese government will again step in and allow the local shares to bounce back, promoting therewith a worldwide trend, the best bet on improving the global picture comes from Japan, where the inflation figures seem strong and should strengthen the global market stability considerably.
Several market analysts were quoted estimating that these fluctuations are normal and should not be cause for panic, furthermore that the Greece and China crises are not as dire as portrayed and that China and the EU will make sure their economies rebound properly. There should be no concern spreading as of yet, the petroleum prices are low and stable, energy stocks are still sound and that Australia’s shake-up is just a temporary consequence of unrelated coincidences not related to Australia’s own markets.
Even though China did seem to have upset many, the investing willingness has not diminished on a worldwide scale, so the temporary upheaval may just be adjusting of the global market towards new and different investment targets, most likely India. The shifting focus should not be reason for concern, but incite re-evaluation of projects that were targeting certain economies and perhaps shifting priorities towards more stable investment goals and countries that have a more stable economy and proper plans for the future. As of now, the best bet is India, but other markets do seem to emerge, like Chile, which has gained unexpected stability, or Canada, which has emerged as the IT behemoth collecting the finest talent available all over the world. Stay tuned for further developments.