Market turmoil


Michael Roberts Blog

As I write on Monday 24 August, stock markets around the world are taking another plunge.  Most markets have already fallen by 10% in the last month.  Why is this happening?

EM stocks

The reasons are clear.  The Chinese economy, now officially the largest in the world (at least as measured by the IMF’s rather weird purchasing power parity method), is slowing fast.  Every bit of data coming out of China shows a worsening situation for manufacturing output, investment, exports and, above all, the purchase of raw materials from other countries.  The drop in demand from China for basic commodities has caused a huge drop in commodity prices (the prices for oil, food, iron, coal, industrial metals etc).  This drop in prices means less export sales for the likes of Brazil, Australia, Indonesia, Argentina etc.  Also the Chinese are not buying so many BMWs, luxury handbags, machine tools, cars etc at…

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