Stock market crash in China
The Chinese stock markets are still volatile, with share prices plunging once again on Monday. Investors are on edge across the globe. Will China drag the world into a recession?
Stock markets worldwide facing crash
Not only the Chinese stock markets are on the brink of a crash, the liberal-conservative daily Neue Zürcher Zeitung fears:
“Below the surface the US economy and stock exchanges have not been running smoothly for some time now. Then there's the falling oil prices and slow growth in China. Major US indices like the Russel 2000 and the Euro Stoxx 50 and the DAX in Europe are 20 percent below the last high - meaning that by definition they are in a bear market. This isn't true for the Swiss SMI yet, but even among the SMI stocks half are 20 percent or more below the last high. It is to be feared that the bearish trend on the stock markets will continue to spread. The stock market plunge is perhaps the trigger for this trend, but not the cause.”
Low risk of infection
Despite the plunging share prices on China's stock markets the liberal business daily Il Sole 24 Ore is not worried that we are on the brink of another financial crisis like the one in 2008:
“Compared with 2008 the world has changed fundamentally in at least two respects that will protect it. The first aspect is the central banks. Almost all the main central banks are pursuing an ultra-expansive monetary policy today, while back then they were in a far more restrictive phase. This makes a huge difference in a world drowning in debt. ... The second is the rules and regulations. Since 2008 approximately 200 directives have been passed to regulate and rein in the banks. Consequently today's global banking system is far less vulnerable and has more capital at its disposal.”