Full stock panic in China: – Beetle has cracked. Those who can sell, sell everything they have – Dagbladet.no

(Dagbladet): Shanghai Stock Exchange opened today with a crimson decline of minus eight percent, before it landed on a minus four. Chinese authorities have long tried to curb the dramatic stock market decline, unsuccessfully, and now spreading panic among investors.

– It is full panic. Everyone wants to sell, and those who can sell, sell everything they have. At the Shanghai Stock Exchange opened on minus eight is huge, says economist Ole André Kjennerud DNB Markets to Dagbladet.

– Beetle has cracked

In the shadow of Greece crisis, the Chinese market fell by 35 percent in three weeks, which is equivalent to ten times as much as Greece’s GDP, or all Britain’s GDP. There is enormous value.

– The peak was reached in early June and we see the potential for further case is very large. I think that bubble has burst when we see a market decline of 35 percent. But it is too early to say whether this is the start of a financial crisis, says Kjennerud Dagbladet.

At the Chinese bubble may burst, has long been the forecast and feared.

– It may look like it has burst now. The authorities have initiated extreme measures to prevent price falls, without success, and China has seen a huge sharp fall after a sharp rise, says a senior economist Erik John Bruce at Nordea Markets Dagbladet.

The stock exchange has plummeted down for several weeks, with individual and short-term ups and Chinese officials have desperately tried to stem the fall in the market, with no luck. They began to cut interest rates before they freed more money in the market by supporting the purchase of shares. The latter instrument is however temporary stop to stop all trade.

– Half of the listed companies have stopped for further trade, as companies and households are not allowed to sell anymore. It is a very special instrument, it is like shooting oneself in the foot. Investors want to sell anyway, and many are forced to sell because they have borrowed money to buy shares. We have a market where investors want to sell and the effect can not the government to counteract said Kjennerud.

How can it affect the world

It’s 20 years since China has experienced a huge drop over two weeks. Initially, the Chinese themselves who suffer losses.

– It’s the average Chinese who lose money here. We have recently seen a strong flow of ordinary Chinese who have gone into the stock market, perhaps without considering the risks. Farmers who invest all their savings, for example. Authorities have urged the Chinese to invest in stocks. The fact that many now not allowed to sell, for example do they have to take up consumer loans to cover stock losses. When we look at the key figures that consumption in China goes down, this will also have a greater effect on the world market, says Kjennerud.

In 2008, a crack in the American housing bubble into a global financial crisis. The fear now is that the huge stock market decline will make the Chinese credit bubble burst. It is because of the large quantities companies that have invested in the market and may face bankruptcy.

However, if a credit crack avoided, not stock prices get so catastrophic effects on the kiesiske – and global – economy. As of now, namely not in stock prices have a direct impact on the global economy, writes analyst Amy Yuan Zhuang of Nordea Markets.

– The big question is whether the economy in China is affected by this, then it can be serious. Otherwise it’s just that rich Chinese who have invested big money, now get big losses, says Bruce Nordea Dagbladet.

For financially is not the Chinese market as well integrated with the rest of the world.

– Fortunately we see little spillover from the stock market into the other types of financial market. In 2008 we got a spread from the exchange to other markets, as investors also were forced to sell much else. The effect we are facing today in China, says Kjennerud Dagbladet.