China Slumps | Global Markets React

Vinai Kongara 28.08.2015

The Greek Economic crisis had a direct impact on the recruitment strategies adopted by firms across the industry. During the crisis, many of the big investment banks took a conservative approach to their recruitment, whilst some halted their recruitment altogether.

The Greek Economic crisis had a direct impact on the recruitment strategies adopted by firms across the industry. During the crisis, many of the big investment banks took a conservative approach to their recruitment, whilst some completely halted their recruitment temporarily. Many Industry experts suggested the uncertainty of the Chinese Stock market wouldn’t have a direct financial impact across the globe. However, the slower economic growth is a concern for countries exporting goods to China.

Following three decades of over 10% economic growth, China has set a target of 7% for 2015. However, figures suggest this is indeed much lower than that, the economic slowdown, along with a rise in national debt; this created a debt bubble which eventually burst on the 12th June. As a direct result of the Shanghai Composite losing all its gains made in 2015 with 8.5% decline, markets across the globe felt the impact

As a direct result of the Shanghai Composite losing all its gains made in 2015 with 8.5% decline, markets across the globe felt the impact.Following on, Chinese government took rigorous steps to take control by cutting interest rates – making this the fifth since November 2014. 

 

Impact on the Global Markets:

  • FTSE 100 fell below the 6,000 mark, its lowest since 2013 as markets panicked over China’s ‘Black Monday’. (A 16% decline from its high of 7,100 in April).
  • This was a direct result of the Shanghai Composite, lost all its gains made in 2015 by falling more than 8%.
  • Japan’s Nikkei also experienced its biggest drop since June 2013, panic selling and a shift to safer investments caused other stock markets to decline alongside.
  • Honk Kong’s Hang Shen lost 4.6% and dropped to 21,378.
  • The FTSE 100 dropped by 2.6% to 5,950.
  • Germany's DAX fell by 320 points below the 10,000 points mark, dropping more than 20% since its high in April 2015, while France's CAC 40 lost around 3.2% over the weekend.
  • Indian market had taken the biggest hit with its bench mark Sansex declined by 16,000.

 

Main Exporters to China:                                 

  • Oil – Saudi Arabia, Russia
  • Cars – Germany, Japan
  • Iron – Australia, Brazil 
  • Copper – Chile, Peru
  • Circuits – Taiwan, Hong Kong
  • Soy Beans – US, Brazil

 

China’s imports as a percentage of world total. 

  • Oil : 14.4%
  • Cars: 6.3%
  • Iron Ore: 57.7%
  • Copper Ore: 31%
  • Soya Beans: 57.7%
  • Integrated Circuits: 31.8%

 

In this instance, only 2% of shares on the Chinese Markets are owned by foreign investors, with so little foreign Investment in China it is unlikely to have a major impact on the recruitment strategies in place within the UK.

Vinai Kongara's picture
Consultant | Project & Change Management Recruitment
vkongara@morganmckinley.co.uk

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