The severe downturn in Chinese stockmarkets could lead to widespread social unrest and a slowdown in economic growth in Asia, according to Citi analysts based in Hong Kong.
The Daily Telegraph reports the analysts’ warning follows Beijing’s decision to treble stamp duty on share trading on Tuesday night which led to a 6.5% fall in the main index.
"A major stock market correction could impact social stability significantly. Of all the likely consequences, this could be the government's top concern, especially as the country is in the middle of a new round of leadership change," says the Citi analyst.
Citi also warned a slowdown in China's GDP growth could impact economic expansion in Hong Kong, India, Indonesia, Korea and Taiwan.
Man Group, the world’s largest listed hedge fund manager, yesterday blamed punishing equity market corrections for a 5% drop in performance on its flagship investment strategy, The Times says.
Peter Clarke, chief executive of Man Group, said this week’s turmoil in the Chinese stock market would be a further short-term blow to quantitative strategies such as that of AHL.
Man said its $18.5bn AHL investment strategy had lost 4.8% for the year to March 31. The 20-year-old strategy, which is based on computer models that identify trends in the movements of different asset classes, lost about 1.3% in the last quarter.
However, the disappointing performance overshadowed a 24% increase in funds under management to $61.7bn at the group.
The Independent reports retailers are reacting to buoyant high-street conditions by pushing prices up at the fastest rate for nine years.
Research by the CBI showed a net 31% of retailers reported higher sales volumes in May than a year ago, down from April's three-year high of 44pc but the sixth consecutive month of growth. The best performers were grocers, DIY stores, clothes shops and shoe shops.
The increase in prices will worry the Bank of England which is committed to fighting inflation, The Independent says.
The survey, conducted during the first two weeks of May, showed a net 33% of firms raised prices last month which is the highest balance since May 1998.
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