THE GLOBAL ECONOMIC SUPER CYCLE IS OVER
The global super cycle that powered the world economy over the last two decades and sent stocks, commodities and property to historic highs, has run its course. As China’s economic miracle starts to unravel, it’s time to prepare for a long, cold winter.
Cover story: Ciaran Ryan, Liesl Peyper and Buhle Ndweni Cover layout: Beku Mbotoli
Cover story layout: Zandri van Zyl
Seasoned market watchers knew something was amiss when China’s stock market cracked in July. There was panic in the sell-off, despite reassurance from some analysts that this was just a blip on the screen and normal services would soon be resumed.
The Shanghai Composite Index has lost nearly 40% of its value since June, wiping out billions of dollars in wealth. The Chinese government dropped interest rates for the fifth time in nine months and devalued the yuan to keep money f lowing into what is now starting to look like a dangerously distended bubble economy.
The currency markets went wild as investors ran for cover of the US dollar, and the much-anticipated hike in US interest rates – due to start in September – may now be put on hold. Suddenly, the one certainty that carried the global economy out of the 2008 f inancial bust – that of China’s emergence as an economic force of nature – appeared to rest on shaky foundations.
The other certainty to emerge in recent weeks is that the decades-long