China stock market meltdown, screams the headlines. True that Shanghai Composite went down by a gut-wrenching 32% in 18 days despite China’s best efforts to stem the selling.
Let us read this news again keeping in perspective that China market more than doubled in last one year.
Do you think that China economy more than doubled in last one year. NO. In fact it grew at the least pace of 7% in 25 years.
Now it is all paper profit unless you book it. So some people booked it and it was a big sell off causing the market to crash.
People are saying that it is going to affect China economy. I just fail to understand how.
It is a zero sum game, this stock market. Some one gains an equal amount some one looses. The money stays in the system.
How the stock market gyrations affect a country’s economy, I don’t know.