China and the Stock Market

By Dr. Gerard Lameiro

What's going on with China? For starters, China devalued its currency recently.  That alone should not cause a stock market crash.  But, for some investors, the devaluation signaled that China's economic growth and economy might be slowing down.  Because China has such a large impact on the global economy, this action spurred fears that the entire global economy might get hit and there might be a global economic slowdown.  The Shanghai Composite in China fell 8.5% on Monday - a negative sign.  That adds to concerns for investors. How does currency devaluation impact other markets around the world?  When China has to pay more for goods and services, it has to cut back on goods and services; there is less money in people's pockets, so-to-speak.  If China, overall, buys less actual goods and services, trade revenues to other countries will decline, thereby impacting the global economy. [Go here for a complete analysis...]