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   The Chinese stock market has been going through a turbulent period - the building of a stock market bubble, and the bursting of that bubble. The question being asked now is, how much will the Chinese economy be affected as a result of this bubble?

   During the past 12 months, the market capitalization of the Shanghai exchange had risen by some 130%, and the Shenzhen exchange by nearly 150%. This trading activity was to a large extent fuelled by relatively unsophisticated individual private investors, many of whom were trading using borrowed money.

   Meanwhile, as the Chinese stock market capitalization was expanding, the Chinese economy was gradually cooling. This could have been taken as a warning of a possible stock market bubble. But the bubble continued to grow, and price-to-earning ratios for Chinese stocks were averaging around 70:1 (the worldwide average is 18.5:1).

   The bubble burst in june, and the market slide continued into early July. The stck market coollapse wiped out some $3 trillion of stock market capitalization.

   But as the market collapse was taking place, the Chinese Government intervened, imposing a number of stock-market and non-market regulations. This intervention has succeeded, and the situation has stabilized. It is still too early to know the full ramifications of this bursting of the bubble. One vital issue is how to maintain investor confidence. Investors are still assessing their looses.

   But let us not forget the old adage, which says something like 'when the big one sneezes, the small ones catch cold.' In this case, the Chinese stock market bubble was the sneeze; the Asian gems and jewellery exporters , notably in Thailand and India, are the ones who caught cold.

   During the time of the Chinese bubble, from about mid-2014 to mid-2015. Thai and Indian exporters report finding that Chinese demand for high-value gems and jewellery was declining significantly. Chinese investors had apparently moved away from gems and jewellery, preferring to seek the heady profits of the stock market.

   What happens now, when the chinese stock market is back on an even keel, remains to be seen, Perhaps Chinese investors will return to the more traditional stores of wealth - gold, and perhaps jade and diamonds. How long this may take is an open question. The gems and jewellery industry is paying close attention as the situation develops.

   Thai gemstone exhibitors during the Hong Kong June show were disappointed by the drastic drop in buyers from Mainland, China. Till now the market has not picked up and exhibitors are not betting on any show in Beijing, Shanghai or Guangzhou during the rest of the year. As we are heading for the Bangkok Show which starts on the 10th September, all exhbitors are crossing their fingers and hoping foe the best. Till now all major shows this year were slow with poor attendance.

 
 
Cover picture :
An exquisite set of Thai fine jewellery modelled by Ms Pitchanart 'May' Sakakorn, and presented at the charity event "Brilliance of Future," Picture courtesy by the Thai Gem and Jewelry Traders Association.
















 
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