Stock Market Crash Of China Harvard Case Solution & Analysis


China’s stock market is suffering from massive volatility, big losses and as a result, investors around the world are running scared and dissatisfied. The stock market crash of China leads one of the largest companies such as Facebook, Google, Twitter, and Walmart to face multiple challenges and decrease in share values. The Shanghai composite index shed 8.5% on Monday and losing 11.5% of its value in five trading sessions. Moreover, the cause of the turmoil is that the investors poured gradually in Chinese’s stocks, even though the country’s economic growth and company’s profits are weak. Furthermore, on 12 June, the bubble popped in China, and Shanghai’s index lost a third of its value before rebounding.

The investors around the world are reacting on the stock market crash and a threat of economic slowdown of China. Moreover, the United States and China are blaming each other more the stock market crash. Furthermore, the financial analysts still finding the reason behind the one of the biggest stock market crash. However, there are some signs of weaknesses in the manufacturing sector of China. Apart from that, the decreasing prices of the currency also lead to having a negative impact on the national and international companies and also the country.

Two months earlier, the Chinese government initiated a strategy to stop the stock market crash and stop injecting funds into the stock market. Moreover, the government imposed regulations that helped the Chinese’s citizens to buy stocks with borrowed funds, in order to prop up stock market prices. The government of China also  limited this practice strictly. Furthermore, the government was worry about the economic slowdown in the country. However, the Chinese government failed to achieve its goals and targets and faced economic downfall.

The Chinese government is still struggling to boost the country’s economy. However, the official figures of the country show that the Chinese economy is growing at 7% in the second quarter of 2015. Moreover, many Western economists suggest that the official figures overstate China’s economic growth. As a result, the decreasing economic growth decreasing the currency value of the country. The central role of China stock market crash is also because of extraordinary poor performances of the leading companies such as Apple, Wal-Mart and Wall Street that relied on the Chinese customers to fuel much of its recent growth.Stock Market Crash Of China Case Solution

Moreover, the stock market crash also affects the raw material prices, all of which falling in anticipation of weaker Asian demand. Furthermore, the decline of the Shanghai index is also a part of worldwide selloffs such as stocks in Japan, Taiwan, South Korea, Hong Kong, Australia all faced big losses and stocks are also down in many European markets. From the past two decades, China benefited from export-oriented growth strategy. However, this growth strategy will not benefit the country in the long run and therefore; China should initiate a winning strategy to transition to an economy that empowers domestic consumption......................

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