Chinese Stock Market Crash: Yuan Falls to 2019 Low

2 months ago

Chinese stocks are falling massively in the middle of the mismanaged trading negotiations due to which there are now more chances of increased tax rates on importing Chinese goods.

Major Stock Market, Shanghai Composite Index Crashes:

The major stock market in China, Shanghai Composite Index has crashed down from around 3280 (on 22nd April) to 2900 (today) in just a matter of fewer than two weeks which is around 12.5 percent drop.

SHCOMP Chart

After being in a bear market from the start and the end of 2018, The Shanghai Composite Index had been trading in a positive momentum since December last year, however, since 22nd April, the stock has been on a downfall again.

CNY/USD Chart

Following the stock, the national currency of China (Chinese Yuan) has also fallen down around 3% against the US dollar with the current rate of around 6.88 CNY to USD.

Chinese stocks were in the boom period in 2015 and 2016 when the great manufacturing migration improved the overall economy of the country. Later in 2016, the banking collapse also accelerated the value of Yuan to its highest point and also pushing Chinese stocks to heights.

However, after Donald Trump was elected as the President of the United States, it led to the restructuring of the global trades.

China annual GDP

The chart shows that the GDP of China has seen a massive downfall since 2010 when it was around 12% to now when it is around only 6%. The GDP of the country is now very close to the lowest point it has ever reached since the fall of communism.

Bitcoin Price Moving Opposite to Chinese Stocks:

Bitcoin Price Chart

The price of bitcoin seems to be moving opposite to that of the Chinese stocks and the Yuan. However, a correlation is not confirmed but some big Chinese investors might be moving away from stocks and entering into bitcoin. However, it is also being said that the current surge in the price of bitcoin is due to market manipulation by large exchanges and institutions.

What are your thoughts on the current price of Shanghai stocks, Yuan and bitcoin? Are they correlated? Let us know in the comments section below.

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