By VICE News
China’s economy continues to tank, and state media dubbed today’s stock market plunge “Black Monday.” This saw China’s main index — the Shanghai Composite — close at 8.5 percent down, after experiencing its worst day since August 2007.
The knock-on effect of this drop could also be felt across the globe. The Dow Jones index in the US fell more than 1,000 points at the start of trading on Monday. Prior to this, the Dow had never lost more than 800 points in a single day.Half an hour into trading, it had stabilized somewhat, though was still down 4 percent.
In London, the FTSE 100 fell for the 10th day in a row, hitting the lowest it’s been since the beginning of 2013. Some 40 billion pounds ($62 billion) has been wiped off its value.
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The price of gold has dropped 0.6 percent, according to the Financial Times, while oil prices hit a six-year low on Monday, as did the Australian dollar.
“Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable,” Takako Masai, head of research at Shinsei Bank in Tokyo, told Reuters.
Eiji Kinouchi, chief technical analyst at Japanese investment bank Daiwa Securities, told reporters that China could be forced to devalue the yuan even more. “The equity markets are dealing with the prospect of a weaker yuan amplifying the negative impact from a sluggish Chinese economy,” he said.
On August 11, the People’s Bank of China devalued the yuan in a move which Beijing said was to encourage market liberalization, and commentators said was an attempt to resuscitate the Asian country’s faltering stock market and economy. China then devalued its currency for the next two successive days.
China’s move to a market-based economy in the 1970s transformed it into one of the world’s largest and most influential countries in terms of industry. However, the World Bank still classifies it as a developing country, with some 98.99 million of its 1.3 billion people living below the national poverty line in 2012.
By VICE News