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7/11/15

Should We Worry About China's Stock Market Slowdown? - by Matt Schiavenza

http://media.cagle.com/95/2012/03/21/108545_600.jpgDays since a referendum in Greece helped push the country closer to a painful exit from the eurozone, another financial crisis is competing for the world’s attention in China, where stock markets have tumbled in the last month.

“Instead of focusing on Athens, investors should be much more worried about what’s going on in China,” warned CNN Money. Writing in the Wall Street Journal, meanwhile, Ruchir Sharma of Morgan Stanley Investment Management wrote that “if ... the Chinese economy spirals downward, it will make the drama surrounding Greece feel like a sideshow.”

This point of view is naturally supported by a range of eye-popping numbers. Over a period of four weeks, Chinese companies lost some $3.9 trillion in value—a number more than 15 times the size of the entire Greek economy.

The Chinese government has employed a range of strategies to halt the slide. Beijing relaxed restrictions on how much investors could borrow to buy stocks, and China’s largest brokerage firms announced a $19.4 billion plan to purchase shares in major companies.

The government has restricted new company IPOs—lest they prevent investors from putting their money into companies already selling shares on the stock market—and have meanwhile suspended trading on thousands of other struggling firms.

Read more: Should We Worry About China's Stock Market Slowdown? - The Atlantic

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