Markets worried about China and the US - Commerzbank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 24, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Research Team at Commerzbank, suggests that the global equity prices – based on the MSCI Global Index – have fallen by more than 10% since the end of 2015.

    Key Quotes

    “A similarly weak start to the year occurred in 2008, the year of the great financial crisis. The financial markets have clearly switched into crisis mode and are reacting to several negative factors.

    Investors are very worried about the Chinese economy. However, the problems of highly indebted Chinese companies are not new. Furthermore, their creditors are mostly state-owned banks and the government will keep these companies afloat. This “zombification” will certainly dampen Chinese growth over the longer term. Over the shorter term, however, it will prevent a Chinese economic crash.

    The problems of oil-producing countries are an additional negative factor, but also one which is not exactly new. That the likes of Russia, Saudi Arabia and Venezuela are suffering a recession, after an oil price slide of 75%, has been clear to all market observers for a long time and is also evident from the data.

    What is new though is the fact that investors have increasingly been discussing the risks of a US recession in the past few weeks. Growth was weak at the end of 2015, sentiment in the economy has darkened and the problems of the oil sector appear to be outweighing the positive effects of lower fuel bills for consumers. For many investors, the USA is already heading for a crisis.”
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