Global Economy: China's Casino Moment - by Holger Schmieding

First boom, now bust: The Chinese equity market may soon serve as a standard case of what can go wrong in the financial sphere.

But seen from afar, do we have to worry? Not much, at least not about China. The Chinese equity market does not have much to do with the real economy. It plays no major role in financing Chinese investment.
China’s equity market is also not a leading indicator for the country’s business cycle. It follows its own dynamics driven by liquidity, regulation and the usual panics and manias to which young financial markets are even more prone than established ones.

The 150% surge which the Shanghai Composite Index registered from mid-2014 to its peak on June 12, 2015 did not lead to a major surge in business investment and Chinese GDP growth.

The fact that the market erased roughly half of these gains until yesterday will not herald a major decline in Chinese investment. However, there will be some impact on corners of the private sector — especially on consumption of luxury goods.

Read more: China's Casino Moment - The Globalist

Financial Industry Under Pressure: Equity markets stirred-up as 'peak oil' fears grow amid Libya crisis

Oil prices spiked near the US$120 mark this morning amid the escalating crisis across North Africa and the Arabian Peninsula.

While Libya's Muammar Gaddafi 'bunkered down' and the country's civilian uprising stepped up a gear, the oil prices have soared, and should the 'unrest contagion' continue to spread throughout the oil producing region, crude prices are expected to keep pushing higher.

Setting aside the political and humanitarian issues, the escalating crisis poses an intriguing dichotomy for investors. On one hand the uncertainty is something of a dark cloud hanging over what had looked like a bright, albeit early, recovery for equity markets. Also the threat of rising costs - from disrupted supply routes, and higher fuel costs - compound lingering fears over inflation.

For more: Equity markets stirred-up as 'peak oil' fears grow amid Libya crisis - Proactiveinvestors (UK)