(Jan. 22, 2016) Investors worldwide are closely watching the steep decline in China’s stock market. The Shanghai Stock Exchange Composite Index is down more than 40% since June 2015.
The reason observers are concerned is not because they themselves are invested: China’s stocks are overwhelmingly held by Chinese themselves. Rather, many are interpreting it as evidence that China’s economy is going down the tubes.
(9/7/2015) It is tempting to view economic events in China through a single template: the view that they are driven by government intervention because the authorities haven’t learned to let the market operate.
(8/2/1015) The plunge of China’s stock market that has taken place since June 2015 has received a lot of attention. All the commentary says not only that the Chinese authorities have taken a variety of artificial measures to try to boost the market on the way down but also that they did the same during the huge run-up in stock prices between mid-2014 and mid-2015, when the Shanghai stock exchange composite index more than doubled. The finger-wagging implications are that the Chinese authorities, particularly the stock market regulator, have not learned how to let the market operate and that they had only themselves to blame for the bubble in the first place.