The risks of a political earthquake in Shanghai

The Shanghai Stock Exchange lost more than 25% of its value in the last three weeks. This is a major shock. If this trend continues the situation will develop into mass panic – many very small investors had borrowed money in the recent past to invest in the Shanghai bourse. It is therefore a major political issue for the authorities in Beijing. They have shown signs of serious concern. Action will be taken in the next few days, for sure. We should observe with great attention the measures they will put in place to respond to the matter.