Indian stock market crash: The Chinese take the view or Credit Shield?.

<P> May 30 the World Bank released the "Global Development Finance 2006" report. .The report shows that in 2005 private capital flows to developing countries reached a record net flows of $ 491,000,000,000. .In the report, the World Bank's senior researcher on the large-scale inflow of foreign capital after the withdrawal of financial stability to emerging market risks expressed strong concern. .</ P> <P> review recent changes in world stock markets, emerging Asia has once again become the focus of the world. .Indian stock market bull run since May 11, after peaking worsened, the Bombay Stock Exchange has suffered the most serious in recent years, fell nearly 7%. .This is the first significant pullback in two years since then, the Indian stock market sustained decline, the market sentiment called the stock market crash. .</ P> <P> According to reports, mainly from the power of selling by foreign funds. .High oil prices, sharp rise in international energy prices, growing inflation, the market for the United States expressed concern about further interest rate hikes. .Strong risk aversion of international investors led by hedge funds and mutual funds are busy adjusting their portfolios. .India's official data, foreign funds have sold 2.4 billion shares in India, there has been the largest net outflow. .A number of people scared, in two days in mid-May, nearly 800 million U.S. dollars have withdrawn from the market. .</ P> <P> large outflow of funds was not only India's stock market dropped significantly, while the people of India will be how the rising current account deficit financing expressed great concern. .Some economists worry that even if this trend continues, this may lead to sharp depreciation of Indian currency rupee, and to combat domestic demand and trigger a new economic crisis. .</ P> <P> this market performance varies, appeared in a variety of speech, during which the mind may well show interesting. .Many publications are also of comment articles, which is concentrated in the mode of economic growth in India, most of the tone is optimistic that the superiority of China's economic growth. .</ P> <P> Some commentators felt that the development of China's key manufacturing sector, strong export capacity to the emergence of a huge trade surplus, commentators refer to FDI (foreign direct investment) policy, citing strong growth in China's GDP .data, citing the expected appreciation of the renminbi good that China appears unprecedented in the history of the world for over 10 years up to double the balance of payments surplus, so optimistic about the strong flavor. .In contrast, long-term emphasis on the service industry in India, ignored the manufacturing sector, resulting in a current account deficit. .Described by these commentators, India, the crisis can not be repeated in China. .Meanwhile, the Chinese stock market bear market swept away entrenched for many years, some people also repeated China's stock market rose out of the independent market complacency. .</ P> <P> However, if we can comprehensively look at the context of China's economic development, you can find much of China's economic risks still exist. .With the increase in the degree of China's economic opening of China's economic dependence on foreign trade (imports and exports that year / year GDP) also appeared high, has exceeded 60%, while the United States, Japan and other countries has been at 16% -18 .% or so. .People have felt the hot real estate market in China, foreign stock markets often seen in the figure, although the country still practice capital controls, but rather, a number of international hot money in anticipation of yuan appreciation has a variety of ways .into the country. .In this regard, we should maintain enough sober. .</ P> <P> concerned about the international hot money movements, wary of large-scale withdrawal of foreign short-term impact on our economy is already in front of us is an important task. .It is understood that the State Administration of Foreign Exchange is actively deploying measures to prevent the outflow of hot money in China a large number of possible negative economic impact. .</ P> <P>, of course, can be expected that in China's capital project is not yet fully open conditions, even if the exodus of foreign capital, China's foreign economic development is also not going to be too much impact. .But this does not mean that we can sit back and relax, for today is already happening in India, we can not hold the mentality of standing on the sidelines, but should conscientiously sum up the lesson, make a rainy day. .(Nathalie) </ P>.