SHARE prices plunged yesterday as the currency meltdown in emerging markets triggered by fears over a slowdown in Chinese growth and the scaling back of stimulus measures by central banks rattled investors around the world.
A contraction in manufacturing activity in China, the world’s second biggest economy, piled more pressure on countries such as Argentina, South Africa, Russia and Turkey, whose currencies were already on the slide amid uncertainty over the tapering of the US Federal Reserve’s money-printing programme.
Argentina’s peso lost 16 per cent of its value against the dollar in two days this week, its sharpest fall since 2002, while Russia’s rouble and the South African rand are at five-year lows against the greenback.
The Turkish lira hit record lows after losing 9 per cent of its value over the past month.
After a drop of nearly 2 per cent in Japan’s Nikkei index, European markets tumbled up to 3 per cent as the fallout from emerging economies sparked global growth fears.
The FTSE 100 Index suffered a 109.54-point reverse to 6663.74, wiping £28billion from UK blue-chip shares in its biggest one-day loss since last June.
The shockwaves spread across the Atlantic with America’s Dow Jones index falling 318.24 points by close. (Express)
Globalisation was the biggest disaster ever thought up by mankind. How a country like China which only 20 years ago had millions of starving people can emerge as a world leader in wealth selling absolutely crap stuff copied overnight illegally is beyond me.
We have to resort to free markets for a reason. Its because the collective decisions of markets are the only way to adjust to the inevitable changes in the world’s economies. Any time bureaucrats are forced to make an extreme intervention, some kind of instability is going to be promoted. The longer that extreme intervention persists, the larger that instability is going to be. If reducing tapering is really causing a problem, that problem is a strong argument for doing the tapering as quickly as possible. The longer the Federal Reserve’s mindless intervention in the global economy persists, the larger the adjustment is going to be when it is withdrawn..