Chinas stock markets have had a disastrous start to the year, falling around 12 percent in the week to Thursday, and sending jitters all over the world. In the United States, the Standard and Poors 500 Index has fallen 4.9 percent so far this year, its worst start in data going back to 1928. Chinese authorities were blamed for fueling panic this week by introducing a poorly designed circuit breaker system that saw the stock market forced to close early in two of the first four trading days of the year.
“Given confidence in China’s ability to manage its equity and FX (foreign exchange) markets has been badly damaged, it is not surprising to see a comparatively muted global reaction,” Angus Nicholson, a markets analyst at IG Securities wrote in a client note. “Markets will be waiting to see the Chinese government’s determination to prop up the stock market and the currency into next week before any major recovery is likely to be seen.”
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