Impact of global market turmoil

The gyrations felt in the world's markets had their roots in China, but Asia's giant was just shifting over to a new way of growing.

Published Wed, Sep 2, 2015 · 09:50 PM

Stock Markets

WHAT we are about to see is a major restructuring of the Chinese economy and the pattern of its trade. It will have enormous consequences for Asia, and within that continent, on South Asia. In a way, this is China's "pivot to Asia". The American version focused on military preparedness. The Chinese will place emphasis on economic links. The stage for this fundamental change was set into motion by the events last month.

Over a period of less than three weeks, there was unprecedented turmoil in the world's financial markets. On Aug 11, the Chinese central bank devalued its currency by 1.9 per cent against the United States dollar and followed it up with smaller adjustments in the next two days. On Aug 24, Dow Jones Industrials in the New York stock market fell by more than 1,000 points soon after the opening bell. The same day, the Shanghai market declined by 8.5 per cent.

China, undoubtedly, was the main reason for this turbulence. Trillions of dollars of value were wiped off the markets in the United States and other major financial centres, raising the question as to what to expect in the future.