The collapse of the Chinese stock market and rising rates of U.S. new global risks

The Greek - or better crisis, crisis of the euro - has monopolized the attention of themarket, the press and politicians in recent months. Its transcendence is the key, not so much by the size of the debt in helena, as per the image that would give a coin thatwas only common when you interested. The advances of the last few days seem tolead towards the end of this chapter of the helena crisis, but that does not mean thatit is all good in the global economy. Quite the opposite: there are other two majorrisks that threaten growth. The first is the collapse of the Chinese stock market and,second, the dichotomy between rising rates in the U.S. and the slowdown of itseconomy.

Landing or free fall?
The great concern of the Asian giant has become the soft landing the free fall. This isthe soft landing of the economy that are encouraging the authorities in the country,the collapse of the stock market in Shanghai and Shenzhen.

The pattern of behavior of the Chinese market responds perfectly to a bubble, with arise of 100 percent in half a year and a subsequent crash of 30 per cent in just one month. In the last two sessions has rebounded 12 percent, but it is still too early tothink that the worst is over. In fact, rebounds like this often occur in scenarios of pricka bubble.

The IMF was very clear this week. The words of the Economist Chief, Olivier Blanchard,leave no doubts: "the bubble has burst" and added, "the Chinese people must getused to these violent turns of the market; It won't be the last".

Are the problems of China market very important? Yes, and much. To such an extentthat own Federal Reserve (Fed) has shown more concern for the Asian giant that forGreece, as it appreciated in the minutes of their last meeting released on Wednesday."The fall in the Chinese stock market is a risk to global growth down," warns GustavoReis, Bank of America-Merrill Lynch analyst.

The uncertainty that is generating the crash of the stock market of the country is aheavy blow to the confidence of the various economic actors. That confidence is thatEthereal element that unites financial markets to the real economy. If market volatilityis transmitted to the streets you will have a great impact worldwide. In the first placebecause of its importance for the rest of the emerging countries, as purchaser of itsproducts and as a conduit for investment. "We must assess China as the great driverof emerging economies," says Reis. Secondly, because it will deepen more in thecollapse of the commodity, which is having a big impact in oceanic and Latin American economies (Australia and New Zealand).

Finally, it must not forget that China is the major financier of deficits of developedcountries. Only in the United States has more than 1.2 billion dollars of sovereignbonds (unposted State debt). A debt they have to refinance and that the Asian gianthas to keep buying for the sake of all.
Liberalization and incentives
China has mixed the perfect cocktail to build a good bubble: monetary stimulus andmarket liberalization. The two together made the delights of investors, which attracteda flood of liquidity to the stock exchange of the country that led to doubling itscapitalization in six months. Imagine the IBEX above 21,000 points in six months.Crazy.

The authorities of the country have been forced to liberalize its market formprecipitated in order to incorporate into the yuan to a basket of reserve currencies ofIMF in the review at the end of the year. The institution requires that capital circulatefreely, which has forced China to open its market.

If the effect of the arrival of international money were not enough, the people's Bankof China (PBoC) more heated the market with its monetary stimulus. I was trying tostimulate the economy, but he found that he was warming up the bags.

There is hope
Despite the fact that the situation is delicate, there is reason for hope. Firstly, becauseChina has proven to be one of the countries with less correlation between the stock market and the economy. For example, GDP forecasts suggest this will be the year ofslower growth in 25 years, in the environment of 6.7 percent. Very low expectationswhich did not prevent the bag to double its capitalization in half a year.

Secondly, because the impact on the real income of the families is limited, since theinvestment of private individuals in the bag is still low. According to Nomuracalculations, only 24.3 percent of the savings is in bag, while the vast majority, 55.5per cent, is in deposits. In addition, the market capitalization is still low: the free float,that is, the volume of the market that is available for the negotiation, just saw