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Will China drag global and Indian markets down?

Created by : Jyoti Rath, Sr. Associate, Barclays  | 09 22 2009 10:12:33 +0000
Industry : Equity Research/AnalyticsFunctional Area : India(Markets)
Keywords : china indian economy sensex indian market global market correction nikkei shanghai market global meltdowm
Activity:  985 views;  last activity : 11 24 2010 06:13:00 +0000

The markets and investors really like to track and listen to 2 people regularly one is Rakesh Jhunjhunwala & Shankar Sharma, In ET now channel there is a programme  Gladiators where in one of the episode saw a debate they carried on the future course of the market, the long term India story, the China factor and many other things. So far they were focussed on China but then what about the US consumer,  the US consumer is now saving more and is certainly spending less.  But then one cannot ignore China and that if China goes under, commodity prices will crash. And again everything will go down.

So what do you think people Will China drag global and Indian markets down according to the experts?

  
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It is not only Chian, any economy even as small a one like Lisotho has problem all others will be sucked into it. So if any adverse effect on Chinese economy can have real trouble for others for sometime which ofcourse will get corrected in the long run but the trouble I believe everyone will have to share in some proportion. for India lot of Indian businessmen have invested there, many people here live here importing Chinese goods and selling them in the Indian Market so on and so forth. Americans will have to restart building their manufacturing activities which they are outsourcing now. Nearly 500000 Americans live just on Chinese economy's influence on Americans. So every country has many of their local citizen comited to Chinese economy and if something happens to them there will be some sort of adjustment proceses from Banks to Regulations that has to be changed which is a difficult thing to undergo for other economies.

Look at the subprime cirsis in America, many Banks started applying risk measures and brakes which affects some simple functions they provide. This they do to cover their risks there and mitigate them and it als works through other ecnomies when they do it as an afershock of that there.
By Mathew Cherian, Research Associate/Analyst, Western Michigan University  09 22 2009 17:57:39 +0000
 
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I don't think that china market will drag global or Indian economy down. Yes China is one of the largest consumers of commodities and it’s the main cause of exceptional high commodity prices. In 2008 oil prices reach $ 147 barrel due exceptional high consumption of oil in china. I think if china’s economy will go down it makes commodities price to be stabilize on lower side. It will provide great opportunity for India to in cash this low commodity prices on their infrastructure development so that tomorrow India can be more competitive to china and other countries.

Yes china market will impact in a great deal to US economy. China is export oriented country and its more than 60% revenue comes from exports. China invests heavily in US treasury and stock, at one point of time it was $ 1 trillion and has major say in US financial crises. If china's economy will go down then china will take out money from US treasury and it makes huge reduction in the value of US treasury and affect US economy.

Indian market doesn't link to china market and India doesn't have much export to china. Yes it will impact little bit indirectly to India due to downfall in US market.

As China is export oriented country and if china's economy goes down and it can't export, then it will provide great opportunity to other countries like India to in cash on china's downfall. Otherwise in most of the cases India lose to china globally due to pricing and other issues.

I say china's downfall will bring great opportunity to India to establish their presence globally.
By Deepak Agrawal, Consultant, Independent Consultant  09 22 2009 15:02:58 +0000
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India & China are too major economis in India..and since Indian markets are globbaly connected..the effect of Chinese markets will surely be seen in Indian markets as markets work on sentiments that whatever changes are seen in one market will surely be taken place in other!!!!
By Ankit Shah, Manager - Risk Advisory  | 11 24 2010 06:12:59 +0000
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    Yes it is true, when china drag global the Indian markets will under go slowdown. India mostly depends on china for commodity products. Most of the product sold in india are made in china. So to overcome this problem India should start manufacturing products by its own and stop depending on other countries.
By Ajit Khan, Sales/BD Manager, Future Group  | 09 25 2009 09:05:53 +0000
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China has huge appetitie for metals & raw material due to its infrastrucutral development. Many indian companies are exporting to china.
By santosh kumar, Marketing Manager, AUTOMOBILE  | 09 22 2009 11:06:03 +0000
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I mean yes, they are the top emerging nation and is billed to be the next superpower in coming years and whatever happens in China will affect the markets across the world and China are showing some weakness, as China led the whole rally, i think it would be a correction to such a big rise, and even i agree with the experts here that the correction globally will happen because of China. Would like to know others view regarding this debate.
By Jyoti Rath, Sr. Associate, Barclays  | 09 22 2009 10:17:43 +0000
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No China cannot drag the global and indian markets because they are only exporting and have invested in US only. If there is a drag in china it may affect US economy but not the other countries and specifically it will not affect the indian economy. 
By Ramakrishna Perumal, Electrical Specialist Engineer,  | 09 30 2009 15:52:47 +0000
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