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Global Markets Feel The Strain

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Forget the Olympics – China has already won one gold medal this year. It's the world's worst performing stock market, with share price falls in local currency terms of 47.6 per cent since the beginning of the year. The good news is that the main Shanghai Stock Exchange remains 100 per cent higher than its level three years ago, but last year's bubble has very definitely popped.

The collapse of China's stock market has been an unpleasant lesson for policymakers, whose attempts to take some of the heat out on the way up with warnings about over-valuation and limits on foreign investments failed spectacularly. Similar interventions have been equally unsuccessful on the way down.

Even as share prices began falling last November, analysts claimed China's booming economy gave investors every reason to be optimistic. But the market is still falling.

China's economy remains buoyant, with strong growth continuing and inflation projected to fall back this year. "Significant underperformance in the short term and the confidence in the long term of fund managers has persuaded some fund managers to up their exposure to China," said Ash Kumar of Morningstar.

However, an over-supply of stock remains after a frenzy of new issues at the peak of the market, and local investors' confidence has been rocked.


As in so much of Asia, food and oil price-inspired inflation is the biggest problem facing Vietnamese economic policymakers, whose attempts to tighten liquidity over the past 12 months caused a stock market crash. Share prices fell on every single day of May, as local investors stampeded for the exit, and the market is now down by 47.5 per cent this year. Much of the money has gone into property, where a new bubble is rapidly developing.

Still, Vietnam's long-term prospects are brighter, with natural resources including plentiful supplies of rice, rubber and tea. The country's rapidly expanding tourist industry is another plus, and it is now a fully-fledged member of the World Trade Organisation. Commercialisation has brought benefits to the country, with the poverty rate down to around 20 per cent today, compared to 58 per cent in 1993.


Think Middle East, think oil. Unfortunately, Jordan is short of the black stuff, and while its rapidly growing population had grown accustomed to generous energy subsidies from the state, these are being phased out. Cue a near-doubling in the rate of inflation to above 9 per cent.

An even more pressing issue for many Jordanians has been the collapse of the property market, where prices had quadrupled since 2003. This has hit commercial property developers hard as well as local residents, who have rushed into property as 20-year mortgages have become available in recent years, replacing the five-year loans that were previously the norm. The Amman market is down 44.1 per cent.

More countries are at the link.

It seems everywhere has property bubbles!!!!!

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Look out for a sharp change in the FTSE 100 - the mining sector has just formed a head and shoulders formation on the chart - this indicates a big price change is likely.

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Well the FTSE tried the old "one day down, next day up hurrah" trick this morning... changed its mind and is currently on a steep downward traj.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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