No wisdom from world leaders on markets
IT HAS wiped out more than $8 trillion (R104 trillion) in the value of global equities, leaving virtually no market unaffected, yet reaction from world leaders so far has ranged from muted to dismissive.
Since August 11, when China set off the panic with its decision to devalue the yuan, US President Barack Obama has kept quiet on Martha’s Vineyard.
German Chancellor Angela Merkel said she was sure China would make it right. French President François Hollande didn’t think it was a big deal.
“Market movements, we know them – and we can’t adjust our positions just to market indexes,” Hollande said in Berlin on Monday, alongside Merkel and Ukrainian President Petro Poroshenko.
“The global economy is solid enough not to have its growth outlook tied only to China’s situation.”
Australian Prime Minister Tony Abbott had a message for investors: Stock market corrections weren’t unusual and “it’s important that people don’t hyperventilate about these things”.
The political restraint comes as European stocks suffered their worst day since 2008, the year Obama came to power in the throes of a financial crisis, and US stocks took a hammering, while Chinese shares fell further yesterday.
As fear spread that the slowdown in the world’s second-largest economy was worse than anticipated and China’s policymakers seemed unable to stop it, Merkel simply said to have faith. “China will do everything in its power to stabilise the economic situation,” she said, citing the International Monetary Fund (IMF), which said the turmoil in China wouldn’t result in a sustained crisis.
Carlo Cottarelli, an executive director with the IMF representing countries such as Italy and Greece on its board, said on August 22 in Rimini that it was “completely premature” to be speaking of a Chinese crisis.
India’s Prime Minister Narendra Modi was taking a glass-half-full approach for now.
Modi said India should turn crisis into opportunity, the Press Trust of India reported.
In Washington, the task of reacting to the financial turbulence fell on White House spokesman Josh Earnest who offered the following reassurance. “Well as it relates to, you know, we’ve seen a lot of volatility in China’s stock markets over the last several weeks,” he said.