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Investors nervous as China looks set to repeat mistakes of last summer

Discussion in 'Market News' started by Lily, Jan 4, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    World stock markets slipped on renewed fears of slowdown in China: could authorities make the mistake of intervening again?

    Just a strong reaction to a weak set of Chinese factory data? Slow manufacturing numbers were a trigger for Monday’s China-inspired falls in stock markets around the globe, but the worries were also fuelled by memories of Beijing’s cack-handed attempts to prop up share prices last summer. Nobody wants a see another shambolic exercise in state-sponsored market intervention, but a repeat performance is a possibility.

    To refresh memories, a 30% fall in the Shanghai Composite Index over a few weeks last May and June prompted a series of emergency measures that, if attempted in the west, would have been deemed ridiculous. State-backed investment funds spent billions buying stocks. Notionally independent stockbrokers and fund managers were encouraged to join in. Finance houses dished out cheap loans to private investors to bet on recovery.

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