Olympic hang­over

Finweek English Edition - - Economic Trends & Analysis -

THE BIG­GEST EARLY LOSER of the Olympic Games was Chi­nese share prices. Mal­colm Moore, in the Lon­don Daily Tele­graph, noted on 11 Au­gust: “The loom­ing threat of in­fla­tion and a post-Olympic hang­over sent China’s stock ex­change to a 20-month low to­day. That makes Shang­hai the world’s worst per­form­ing in­dex this year. The com­pos­ite share in­dex has lost al­most 60% since last Oc­to­ber.”

In­vest­ment group Gold­man Sachs pub­lished a re­search note pre­dict­ing a gloomy post-Olympic pe­riod for the Chi­nese econ­omy. A Bei­jing blog­ger, re­flect­ing a wider mood, com­plained: “The gov­ern­ment has spent all the money on the games in­stead of ac­tions to help the mar­ket.”

But most ex­pe­ri­enced fi­nan­cial an­a­lysts at­tribute the sharp de­cline in Chi­nese eq­ui­ties es­sen­tially to broad eco­nomic fac- tors. Those are much higher in­fla­tion in China and global eco­nomic weak­ness.

Gold­man Sachs says while the longterm im­pact of the Olympics on China’s econ­omy will be neg­li­gi­ble, the short-term ef­fect in­creas­ingly looks like be­ing neg­a­tive. That’s be­cause China has spent about US$70bn not only on sta­dium and games­re­lated in­fra­struc­ture but also vi­tally on dras­tic econ­omy-hit­ting mea­sures to curb chronic pol­lu­tion prob­lems.

The Olympic games have also turned a glar­ing fo­cus on many Chi­nese so­ciopo­lit­i­cal short­com­ings.

The Soc­cer World Cup in 2010 could also have con­se­quences for SA, dif­fer­ent as they may be from China’s sit­u­a­tion.

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