The numbers are staggering, but Beijing’s measures to prop up tumbling shares look like a ridiculous over-reactionAs Greece holds a referendum that may create more uncertainties than it solves, are we looking in the wrong place for a financial crisis? In China, the authorities are in a fine sweat about a more traditional financial conundrum: a bubble in the stock market. How do you deflate it safely? Should you even try?As with many things in China, the numbers are staggering. The two main indices – the Shanghai Composite and the Shenzhen Composite – had risen about 150% in the 12 months to mid-June. In terms of market value, that was a gain of about $6.5tn. Since then, the market has tumbled almost 30% – call it a $2tn plunge.Beijing was sending a message that it is setting interest rates for the stock market rather than the economy Continue reading...
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