The uncertain Chinese economy is causing great nuisance and hindrance to American stock market interests. As of yet, the American stocks are enduring pressure due to the depreciation of Chinese currency along with the bailout of Greece – which is now headed to another election.

The industrial average of Dow Jones fell to 153 points/ .9% at 9:35 am on Friday, while Nasdaq struggled at 69 points/ 1.4% and lastly, the S&P 500 Index fell 19 points. The stock market took a deep dent when the Chinesegovernment decided to depreciate theircurrency value. The 2nd largest economy looks in a grave situation.

Meanwhile, the Greek prime minister decided to jump the sinking ship, multiplying existing fears. Moreover, US crude oil price went down by 23 cents as well to $41.0/ barrel.

The Chinese stock bubble seems, as per most predictions, to burst. The Shanghai Composite Index fell below 32%, while the tech-based Shenzhen Composite Index fell below 40%. The Chinese stocks listed in the American exchanges remained unmoved during the initial three weeks. Their value decreased a bare minimum, neglected by investors as fractional changes due to margin trading, speculative trading and absurd valuations.

AChinese gaming firm, NetEase lost 10% of its stock in just two days alone. More so, Sina fell 15% from its usual value.

The others followed suit:

  • Yoku -19%
  • Changyou -25%
  • Sohu -20%
  • Weibo -20%

Exception to the rule was Alibaba, the ginormous e-shopping store went down just 3% during this meltdown. Baidu on the other hand, went down just 5%. These two stock shares are worth gold and surefire winners from a fledgling Chinese economy.

Tostabilize the market, China’s central bank offered to inject some liquidity, resulting in zero benefit. China's attempts to weather the storm seems similar to Japanese ones during the 90s. The end result was a total financial meltdown of the Japanese economy.

In the case of Chinese firms, it’s bad News since it gives way to halt all forms of consumer spending momentarily.

With China’s slowed growth, the government attempts to drive the economy away from banking on housing and infrastructure to consumer spending. Its dotcom companies are listed in American stock exchangeand rely on their support for e-commerce, ad revenues and games.

In case China goes into selloff overdrive, it’s bad news for American firms banking on Chinese markets for their revenues. As per General Motors, its sales went flat during the month of June, even after it decreased prices of its vehicles on a variety of models. Apple is another beneficiary of theChinese market, selling its products by the millions.

For now, the Chinese bubble has been a nightmare for theAmerican stock market and concerned personnel.

If matters aren’t controlled properly, American firms will face a catastrophic monetary famine in this global village.

The Chinese government is known to manhandle the economy as it finds feasible. Due to present conditions, it cut down interest rates, forbade IPOs and pooled up $19 billion with the help of fund managers, for slowing the selloff.

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