If anything could make China forget about the Olympics, it's the fall of their stock market. This is actually serious and could cause much more significant changes in their system.
But China's stock market bubble has burst, leaving 150 million share investors waking up to their worst hangover ever. The combined effect of a vertigo-inducing rise in inflation, new regulations and a slowdown in the US economy has brought share prices down as quickly as they went up. Indeed, after further falls this week, Chinese shares are worth just half what they were last October, when the market peaked
One problem is the strength of the Chinese economy – and the inflationary pressures that has brought. Fears that government initiatives to tackle inflation will damage corporate profits has wiped $1.9 trillion off the value of Chinese companies since the beginning of the year. "The dive is the reflection of investors' mounting concern about the economic scenario," said Zhang Ling, a fund manager based in Beijing. "Runaway inflation is pretty bad for the economy and equities, raising costs and slowing earnings growth."
Nor does the outlook for the global economy help confidence in China, which has built much of its boom on exports, the demand for which may now dry up. The rising cost of global commodities also threatens profits.
Main & gay blog