Editorial: China stock market crash hits commodities

While the year long bubble in the Chinese stock market didn’t translate into higher commodity prices, the spectacular bursting of the bubble over the past month has slammed a wide swath of commodities – including iron ore, copper, zinc, nickel, precious metals and oil – as investors anticipate further slowing of the Chinese economy.

At press time China’s benchmark index, the Shanghai Composite, had dropped to a three-month low of 3,507.19 – a 5.9% plunge from the previous close, and down a remarkable 32% from the all time high of 5,166.35 achieved less than a month earlier on June 12.

Some US$580 billion in market capitalization has been obliterated since the June peak, even as the popularity of stock trading has grown exponentially amongst individual Chinese investors, estimated to number 90 million.

The particularly sharp drop on July 7 – a day the index fell 8.2% in mid-session – could actually have been worse, as stocks traded on the Shanghai and Shenzhen exchanges are halted for the day after they drop 10% in one session. At the moment, trading has been halted for this reason on more than 50% of mainland China stocks, even as the rout has rippled across the world’s stock and bond markets.

Read the complete article at NorthernMiner.com/news/china-stock-market