Beijing can’t beat the markets By RUTH SUNDERLAND

Perhaps it’s the high price of piglets. Then again, it could be the prospect of rising interest rates in the Us. Whatever is to blame for the latest rout in Chinese shares – and those are two possible causes cited by the soon- tobe-Japanese Financial Times – the nosedive in shanghai and shenzhen was felt in markets around the world, including the UK.

The reason piglets are in the frame, incidentally, is that the pork price is an important component of Chinese inflation. If inflation starts to run away, that would mean the Beijing authorities have less leeway to support the stock market.

The underlying issue is that, compared with the West, Chinese markets are immature. Volatility has been driven by large numbers of inexperienced individual investors, many of them indulging in socalled ‘margin’ trading, or dealing on borrowed money, which magnifies gains and losses. Until recently, there was also a rush of company floats blowing up the bubble.

The turmoil in China would no doubt have been worse had it not been for intervention by a government acutely conscious that individual small investors stand to run up ruinous losses.

shares are not allowed to fall more than 10pc before trading is suspended – as around 1,800 companies were on Monday. But there will come a moment when the realisation dawns that no government can defeat the markets, not even a Chinese communist one.

as for the UK, the impact on shares is likely to be fairly limited. Commodity businesses in africa and southeast asia may be hit, with a knockon effect on Londonlisted miners and traders. But China is likely to prove a good longterm bet for companies such as the pru or reckitt Benckiser that have been building a business there.

There may even be benefits for Britain from the current chaos.

It makes the bluster from HSBC about quitting Canary Wharf for hong Kong or shanghai sound less plausible. and there is a lot of funny money sluicing round the system, much of it channelling from Chinese investors into London property they will never see, let alone live in.

If that tide were to ebb, it would be a boon for homebuyers in the capital. From piglets to penthouses, it’s become a small world.

Reckitt remedies

Rakesh Kapoor, the chief executive of consumer goods giant reckitt Benckiser, has had a good first half.

sales are strong in products from Lemsip to Durex condoms, to scholl electronic footfiles that apparently remove hard skin in a similar fashion to a kebab slicer, leaving users with a velvetysmooth pair of heels. Costcutting has run ahead of schedule under project supercharge, a draconian economy drive that – horror of horrors forces executives to give up business class on shorthaul flights.

The group late last year floated off its pharmaceuticals division, which housed one key product, the suboxone heroin substitute that now trades as Indivior. Investors can expect further restructuring.

The home division, which sells products such as airwick air fresheners, accounts for around a fifth of group sales but produced only 1pc growth. It could be sold off for as much as £5bn, boosting the war chest for acquisitions in the consumer health area such as advil headache pills.

Not that Kapoor should need them himself. reckitt has produced impressive figures despite upheaval in the eurozone and China, demonstrating the old adage that investors should think primarily about companies and how good they are, rather than markets.

Merlin blow

The accident on the smiler rollercoaster in June at alton Towers has had a big impact on owner Merlin entertainments, knocking up to £47m off profits for its theme parks division, and the adverse effect could continue into next year.

The reason the blow is so heavy is that the business is by nature high on fixed costs, in terms of maintaining and supervising the rides, so every lost visitor exacts a big toll.

Merlin has accepted full responsibility for the accident and in the immediate aftermath closed alton Towers and suspended a number of rides across its other parks.

It also reduced its marketing in the run up to the summer season, which was the correct decision, considering how tasteless it would have been to have conducted an ad blitz.

Nick Varney, the chief executive, said he has been ‘humbled by the grace and fortitude of those who were injured and their families’.

Unlike other leisure companies, such as Thomas Cook, Merlin’s response to a terrible accident has struck the right note, which may reassure shareholders and visitors that lessons have been learned.

The shortterm costs are high but it is the ethical thing to do – and, in the long term, it is likely to be better for investors.