About USD2.2 trillion was believed wiped out from the value of global stocks within just four days of trading last week, Bloomberg has estimated, partly due to concerns about the real state of the Chinese economy.
Markets from Tokyo to Europe sustained bruises as sell-off last week sent stocks plummeting to their lowest as investors were concerned that the slowdown in the Chinese economy has shown little sign of abating.
Negative economic figures have already made investors worried but when China’s manufacturing fell to its lowest in about six years, investors started a sell-off.
The week sent the US stocks to its worst since 2012 while oil prices in the US were headed for its longest losing streak in 30 years.
The worrisome China economic figures came even as the Chinese government already took steps in trying to control a further fallout of the local markets.
The People’s Bank of China, the country’s central bank, also moved in to devaluate the local currency, not once but thrice in just a week, rattling the global financial community.
All eyes have been in China since June of this year, starting with the stock market rout. The central bank intervened by releasing more money into the markets.
This week’s manufacturing data, however, further added to evidence that China’s economy still has not recovered.
According to the China Caixin Flash Manufacturing PMI, manufacturing activity in the world’s second-largest economy fell for sixth straight month in August, its lowest in 77 months or 6.5 years.
The flash PMI fell to 47.1 this month, a 0.7 drop from July’s 47.8 reading. The manufacturing figure in August also fell lower than the forecast by economists for a 48.2 reading.
According to Caixin Insight Group chief economist He Fan the further drop of the Caixin Flash China General Manufacturing PMI in August indicates that China’s economy is still in the process of bottoming out. – BusinessNewsAsia.com