US Trade War Impact: Chinese Stock Market Plummets To Its Lowest Since 2014

Shanghai Composite Index again closed at a record low since 2014 indicating the continuing sink the Chinese stock market is currently facing. The gauge fell by 1.1 per cent to 2,651 points, which is lower than its January 2016 bottom.

The numbers indicate that China hasn’t recovered from the 2015-16 crash. Many companies are reportedly finding it difficult to cut off from equity financing, leading to the creation of more debt. It is headed for a straight fourth-quarter loss, one of the most protracted declines since 2008.

The increase in Chinese equities contrasts with gains for global stock, reports Bloomberg. The MSCI World Index is up by 21 per cent since November 2014.

Tensions over trade with the US is expressed as one of the primary reasons for investor concern. The Chinese government has been planning to decline talks with the US since President Trump has told aides to go ahead with extra tariffs on Chinese products.

China’s yuan has fallen by almost 7 per cent since March, allegedly because the Chinese were trying to counter the impose of US tariffs.

Since there has been an increase in Chinese equities, it is likely that this will increase the appeal of other assets such as property, which will undermine the government’s efforts to display the stock market as a base for company funding.