Tuesday, June 30, 2015

The China Collapse

Greece has taken center stage in the world economic news, as investors around the globe watch to see if the country will default and/or exit from the euro. That's taken the spotlight away from China, where the news isn't as dire but has been plenty bad for Chinese investors in recent weeks.

The Shanghai Composite Index has lost about 20 percent of its value within the space of less than three weeks. The market has lost $1.25 trillion in market capitalization in that time frame. Two other Chinese markets are already officially in bear market territory.

As a result, China's central bank has just slashed interest rates, hoping to stanch the bloodletting. On the other hand, the volatility of the Chinese market may make this swoon look worse than it is: Even with the recent sell-off, the Shanghai Composite is still up 29 percent on the year.

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