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Chinese stock bouble 2007 - Research Paper Example
Author : westalexys
Finance & Accounting
Pages 7 (1757 words)
Chinese Stock Bubble 2007 Reasons, effects and recommendations Group member 1 Group member 2 Group member 3 Submitted to: and code TABLE OF CONTENTS In the past five years, some of the largest stock markets have been subjected to asset pricing bubbles; these have included stock markets in developing markets like Brazil, Russia and India (“How We Explain the Chinese Stock Market Bubble” 1)…
This led to the skyrocketing of trading volume, as retail investors sought to reap the benefits of the record-making rise. According to a 2008 report by Yao and Luo, the SSE had hit 6124.04 by October 2007 (10). That this was a stock bubble, was not lost on analysts - vice chairman of the National People’s Congress in China, Cheng Siwei, was among one of the many analysts to point out that, following a year of volatility, the Chinese stock market was overheating (qtd. in Tucker & Dyer). Even though the government took steps to tackle the dramatic situation, it could not succeed in heading the bubble off. By the end of 2007, the stock bubble had ‘burst’ - the SSE Composite Index began to see a fall right after October 2007 and, by the middle of 2008, had plunged to a shocking 2651.6 1 - less than half of what the index had been at its peak (Yao and Luo 7). This paper looks at this stock market crash - also known as the Chinese Stock Bubble 2007 - in detail, outlining what it was, the reasons because of which it occurred, and its effects on economic conditions within and outside of China. ...