Chinese market meltdown and its financial impacts on major economic sectors

Abstract

China is one of the major players driving global growth. The recent Chinese Market meltdown is sending panic waves across the globe. It was speculated that Chinese market meltdown was only a market bubble and that the Chinese economy would remain isolated. But we cannot discount the fact that China is woven into the fabric of the Global Economy. Its worker force is an integral part of the supply chain of countless Western Companies. China’s Economy provides a large and substantial share of demand for all of the world’s raw materials. So expecting that the effect will be confined only to the Mainland China is certainly wrong. It was observed that the Chinese stocks listed globally (in Hong Kong, The US) had also fallen, suggesting that the repercussions on the world economy might be real. Markets in Shanghai on 24 August 2015 saw its worst single-day fall in eight years. Stocks on the Shanghai Composite were down 8.5% which is by far the biggest possible decline in its history. The severity of that day (24th August 2015) can be realized from the fact that The People's Daily, the Communist party's mouthpiece, declared it as "Black Monday". The effects in China were spilled over to other countries as well. The Nikkei index of Japan and European bourses slipped by 4.6% and 4.5% respectively. The Eurofirst 300 index has had its worst day since 2009. As of now Germany’s DAX has lost all the gains it made in 2015.