China's Stock Markets Drop Over 20% in 2011
NTDTelevision
2012-01-03
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And a look at China's stock markets. 2011 saw big drops—the worst performance since the global financial crisis in 2008. It comes as China's economic growth slows, and a series of accounting scandals has made some investors wary of putting their money into new Chinese companies.
China's stock markets took a big hit over the past year.
The Shanghai Composite Index dropped nearly 22 percent in 2011 compared to the previous year. The Shenzhen Composite index dropped 28 percent.
China's state-run CCTV said on Saturday it was a result of tighter bank lending and weak consumer demand from the United States and Europe.
There may be other factors too.
Many Western companies have become more cautious about investing in China's stock markets. A series of accounting scandals last year raised red flags.
In early December, Goldman Sachs told Bloomberg it plans to avoid China's IPO boom—because investing there has become too risky and unprofitable.
And last week, French bank and financial services company Société Générale announced it would stay away from Chinese IPOs altogether. They say it's become too hard to assess their quality.
The Financial Times reports that almost three quarters of IPOs in 2011 lost money on their first day of trading.
Professor Frank Tian Xie from the University of South Carolina Aiken says part of the problem in China is unreliable data.
[Frank Tian Xie, University of South Carolina Aiken]:
"In the US or in the West, regardless of the ruling government's policy, we must first have data that can accurately describe the economic situation. Not in China though... [In terms of] the inflation rate, people's incomes, tax revenue, and businesses profits—the data is not credible."
Follow us on Twitter ☛ http://twitter.com/NTDTelevision
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And a look at China's stock markets. 2011 saw big drops—the worst performance since the global financial crisis in 2008. It comes as China's economic growth slows, and a series of accounting scandals has made some investors wary of putting their money into new Chinese companies.
China's stock markets took a big hit over the past year.
The Shanghai Composite Index dropped nearly 22 percent in 2011 compared to the previous year. The Shenzhen Composite index dropped 28 percent.
China's state-run CCTV said on Saturday it was a result of tighter bank lending and weak consumer demand from the United States and Europe.
There may be other factors too.
Many Western companies have become more cautious about investing in China's stock markets. A series of accounting scandals last year raised red flags.
In early December, Goldman Sachs told Bloomberg it plans to avoid China's IPO boom—because investing there has become too risky and unprofitable.
And last week, French bank and financial services company Société Générale announced it would stay away from Chinese IPOs altogether. They say it's become too hard to assess their quality.
The Financial Times reports that almost three quarters of IPOs in 2011 lost money on their first day of trading.
Professor Frank Tian Xie from the University of South Carolina Aiken says part of the problem in China is unreliable data.
[Frank Tian Xie, University of South Carolina Aiken]:
"In the US or in the West, regardless of the ruling government's policy, we must first have data that can accurately describe the economic situation. Not in China though... [In terms of] the inflation rate, people's incomes, tax revenue, and businesses profits—the data is not credible."
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