The Shanghai stock market suffered its worst one-day fall for eight years on Monday. There appeared to be no rhyme or reason for the 8% sell-off. It just did. Some market watchers tried to explain the crash on poor economic data.
Others reckoned it had something to do with rumours that the Chinese authorities could withdraw support measures for the market. Since June 2015 United SSE 50 China ETF (SGX: JK8), which tracks the Shanghai stock market, has fallen some 25%. Maybe the shares are still too expensive.
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The US economy grew at an annual rate of 2.3% between April and June. Growth was driven by consumer spending on big ticket items such as cars, trucks and houses. The strong growth has put the Federal Reserve back on track to raise interest rates in September, again. Last week experts were certain the Fed would hold off. This week they are certain it will hike rates.
Going back to China, the world’s second-largest economy said it will step up “targeted” adjustments to the economy. Experts reckon that “targeted” means the government could cut taxes and interest rates. Most experts are of the opinion that China will need to cut the cost of borrowing, if it wants to achieve growth of 7% this year. Consequently, interest rates could be cut by another 0.25%. When all else fails, just throw money at the problem.
Singapore’s sovereign wealth fund, GIC, said volatile markets could lower its returns for the next five tom 10 years. For the past 20 years, annualised real returns were 4.9%. In 2014, it was 4.1%. GIC said bonds and cash remains its largest asset class at 32%.
And finally, Microsoft has launched a new operating system in almost three years. Windows 10 is designed to work across laptops, desktops and smartphones. The operating software appears to be well received by those who have put it through its paces. Window 10 will be available as a free upgrade for users of Windows 7 and Windows 8.1. What happened to Windows 9, you may well ask?
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