Fears that the world economy has run out of juice will see investor flee from risky assets warn analysts
The worldwide rout in stock markets may be the first sign that global growth is beginning to falter, a top City analyst has warned.China’s shock devaluation of the yuan prompted panic selling across global equity markets, triggering the biggest one-day fall in European stocks in four years on Friday. The sell-off came amid fears that the Chinese economy is sharply slowing
.Panic selling grips global markets as stocks crash on China turmoilWhy China`s devaluation is a peace to the worldNick Lawson, global co-head of macro at Deutsche Bank, said “the cracks began to emerge this week, as growth fears reasserted themselves”.There has been a mass exodus Mr Lawson said, as investors offloaded commodity, chemicals, and industrials stocks. The mining-heavy FTSE 100 became one of the biggest casualties of the Chinese turmoil, plunging 530.84 points in a “frightful fortnight” to 6,187.65, wiping some £136bn off Britain’s largest companies.
However, as volatility picks up worldwide, and investors flee to the sidelines, two uncertainties remain, said Mr Lawson, "the magnitude of the Chinese slowdown, and whether central banks will inject more stimulus”.
While commodities and luxury goods makers were left nursing hefty losses after the yuan devaluation, UK-listed clothing retailers have been quietly revelling in China’s demise.Primark, Sports Direct, Debenhams, Home Retail and Asos are among the winners emerging from the imploding Chinese boom.Andrew Hughes, of UBS, said “those sourcing from China should see reduced pressure on cost of goods sold”.Clothing retailers who sell to developed markets, but rely on inputs from China, will now be in a position to renegotiate contracts.
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