Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China: What Deflation Looks Like

Stock-Markets / Deflation Jul 10, 2015 - 08:05 AM GMT

By: EWI

Stock-Markets

Why the 32% slide in the Shanghai Composite is more than just a "hiccup"

The Shanghai Composite fell another 8% at the open on Wednesday (July 8). Trading was soon halted by the authorities. (But for a different reason that the trading halt on the NYSE the same day.)

From its all-time high on June 12, China's main stock index is down 32%. Using the word "crash" is becoming appropriate.


"At the moment there is a mood of panic in the market and a large increase in irrational dumping of shares, causing a strain of liquidity in the stock market," said China's Securities Regulatory Commission on Wednesday (bold added).

But the "dumping of shares" is not the only type of selling that's going on in China right now. Bloomberg reports that (bold added),

"China's stock rout spread to the country's commodities markets as investors rushed to raise cash. Everything from silver to sugar to eggs tumbled with the Shanghai Composite Index, which crashed to a three-month low on Wednesday. 'People are selling everything in sight to get their hands on cash.'

'Agricultural products in my view are collateral damage in this selloff," said [one] fund manager...'Pigs are still going to eat, so what does this stock market stampede have to do with soybean meal?'"

Good question. But if you remember the darkest days of the 2008 financial panic and the now proverbial "liquidity crunch," the situation in China should sound remarkably familiar.

Familiar, because when everything falls in price, it's called deflation. We in the U.S. had a strong brush with it in 2007-2009, Europe has been struggling with deflation over the past couple of years -- and now, it seems, China has caught deflation bug, too.

Here's how our recent Short Term Update put it:

"The financial media seemed to breathe a sigh of relief that stocks were not down more from the results of Greece's referendum. But these stories miss the entire point of what's transpiring, in our opinion. Greece's default is not the cause of the current financial malady but the result of a trend toward an increasingly pessimistic social mood.

"The negative mood trend will eventually manifest throughout financial markets and in culture more generally. Greece, Puerto Rico, China and a variety of 'risk' assets that are declining are just the first step in a broader and longer trend toward economic and financial contraction."

Our current Elliott Wave Financial Forecast adds:

"As Bloomberg summed it up, 'when you can't sell what you want, then be prepared to sell what you can.' There is a lot of indiscriminate selling to come."

What You Need to Know NOW About Protecting Yourself from Deflation

Get this special report about the unexpected but imminent and grave risk to your portfolio PLUS 29 specific forecasts for stocks, real estate, gold, new cultural trends -- and more (excerpted from Prechter's New York Times bestseller Conquer the Crash -- You Can Survive and Prosper in a Deflationary Depression).

Get your special report now >>


This article was syndicated by Elliott Wave International and was originally published under the headline China: What Deflation Looks Like. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in