It’s panic on Wall Street after the Chinese stock exchanges saw a steep decline of about 7%. The circuit breaking system, designed to prevent free-falling prices, was triggered twice this week, and on Thursday, within only a half hour of trading, giving China their shortest day of trading in years.
The result of this fall in Chinese stocks could be felt across the world, with European and American stock markets falling as a result. Big name banks such as Citigroup and Morgan Stanley fell more than 5% and technology stocks, including Apple, Amazon, Facebook and Google fell between 2-4.9%.
China is a huge force in the global economy, so the signs of an economic slowdown in this country are shaking up nerves around the world. Not only is China the second largest economy in the world, but also the second largest importer of consumer goods and services, meaning other markets around the world would inevitably be hurt in the case of a Chinese collapse.
Many analysts believe that Chinese’s move to decrease the value of the country’s currency in an effort to entice more exports are a sign that the consumer demand within the country is weakening much faster than anticipated.
Although only time will tell to what magnitude this Chinese slowdown will affect the rest of the world, even billionaire investors are nervous about what lies ahead if China continues on this downfall. George Soros recently compared 2016 to the great recession of 2008, not a great sign of things to come.