China\\\'s economic downturn

The world has seen another "Black Monday" on August 24, 2015 as the Chinese economy recorded a downturn. Almost all the large stock markets around the world experienced a major slip in stock prices on that day. Now, the question is, is there any relationship between fears of Chinese economic downturn and our economy?

Analysts say that there is no direct relationship between global stock markets and our stock markets and fears of China's economic downturn would not affect our stock market. This is true that the portion of foreign investment in our stock market is negligible which would not be able to cause a major change in stock prices. But the question remains, does only the portion of investment of the market cause the stock market changes?

China imports raw materials and half-processed goods from all over the world. Though our imports from china are more than our exports to them, it would badly affect our economy as China's downturn would lower their economic growth. Besides, a great number of our industries largely depend on raw materials which are imported from China. As China's downturn would lower their exports, our industries would also have to lower their productions. As a result, our economic growth will fall below the projections which would push down our stock prices in the near future.

Md. Mazharul Islam

BBA 4th year,

Department of Finance

University of Dhaka.