August 25 ,2015 | by Hari Sri

Chinese economic woes hit global shares

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The continuing fallout from China's current domestic financial problems has hit stock markets in London, Paris and Frankfurt as investors become more concerned about the state of the world's second largest economy.

Shares fell sharply with London's FTSE 100 index down by 2.6% in morning trades while counterparts in France and Germany fell by almost 3%.

Worst since 2007

The Shanghai Composite in China closed down 8.5%, the worst performance since 2007 as the efforts by the Chinese authorities to reassure investors seemed to be having little or no impact.

An uncertain outlook is made worse by the six-year low in oil prices and trading volumes in Europe, which also remain low.

David Madden, market analyst at IG, said: "It does appear that we're moving very quickly to the downside."

"I think more uncertainty lies ahead," he added.

The traditional August holiday season may also be playing a part, with many investors away meaning the market may have to wait for bargain hunters to come back to the markets and subsequently buy stocks that have become more attractive to them.

Failed measures

The recent devaluation of the yuan seems to have failed to calm traders' nerves around the world, and the latest intervention of allowing investment in the stock market by its main state pension fund has not made much impact.

In fact, the Shanghai index fell 12% in the past week, meaning that the total drop since the middle of June now stands at 30%

With cheaper Chinese exports spreading worries about European exports becoming less competitive, the FTSE 100 posted a weekly loss of 5% and the Dow Jones fell 6%. 

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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