A slow-down in the Chinese economy is causing share prices across the world to fall

A slow-down in the Chinese economy is causing share prices across the world to fall

The global sell-off was driven by fears that China?s slowing growth might pull down other economies.

The Shanghai Composite, China?s main stock exchange, was down 4% at midday on Tuesday ? it had dropped 8.5% on what state media have called China?s ?Black Monday?.

Tokyo?s Nikkei index had a volatile day, closing 4% lower.

Other Asian markets opened lower on Tuesday, but recovered in later trade.

The Shanghai index opened 6.4% lower, but recovered slightly to end the morning session of trade down 4.3% at 3,071.06 points.

After decades of rapid growth, China is slowing down, and investors globally are worried that firms and countries which rely on high demand from China ? the world?s second largest economy and the second largest importer of both goods and commercial services ? will be affected.

Chinese shares had experienced a year-long rally ? mainly fuelled by investors borrowing money to buy shares ? which came to an end in June.

The Chinese government then intervened in financial markets, to try to maintain momentum in the economy.

Two weeks ago the central bank devalued the currency, the yuan ? this raised fresh concerns that China?s economy could be in worse shape than previously thought.

A cheaper currency lowers the price of China?s exports, making them more attractive to global firms.

Elsewhere in Asia and Australia on Tuesday, markets beat expectations, opening lower but then returning back to positive territory by lunchtime:

Hong Kong?s Hang Seng was up by 1.6%Korea?s KOSPI gained 1.3%Australia?s S&P ASX/200 rose by 2.4%

The dollar remained weak at 119.15 yen, up from a seven month low of 118.51 yen in New York on Monday.

Commodity prices also recovered after Monday?s falls, although oil remains under pressure because of a global oversupply.

Overnight, the Europe and the US saw dramatic falls, but are expected to show some signs of recovery when they open on Tuesday.

Wall Street?s Dow Jones fell 6%, then almost recovered its losses before closing 3.6% lower.London?s FTSE 100 index closed down 4.6%.Major markets in France and Germany down by 5.5% and 4.96% respectively.

BBC

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