Chinese Stock Market Slump Shakes the World Stock Markets

Over the past four years, United States stock markets have recovered very strongly. Chinese emerging economy and stock markets have played a major role in the world markets. China main stock index has doubled in value in the past year making China one of the major players in the world stock markets and the world economy as a whole. Chinese recent economic slump has worried the entire globe and has triggered stock prices to fall tragically in China, India, Europe, Australia and in the United States. Chinese stocks plunged nearly 9 percent on Tuesday.


What is going on?
The question facing many investors and some of us is how far and how long the fall in prices will last. What went wrong in Chinese stock markets is now affecting the world stock markets.


The markets were surprised by the speed and size of recent declines.

According to BBC "Markets across Europe and Asia remained deep in the red, triggered by 9% losses in Shanghai the previous day"

Markets in Asia, Australia and India have suffered substantial losses. What went wrong? Who is getting affected? Is the world market safe enough? Will the world stock markets recover?

The Chinese stock markets shake up/meltdown was caused by rumours of Chinese
government cracking down on illegal share offerings and trading, as well as fears about accelerating inflation.

Political factors also weighed on the market movements with speculation about government plans for tax reform and rural expenditure. Even though, China's economy has been doing great we must remember that "Even if a market's upwards trend is not broken, a market correction can still be significant" analysts said.

"Turnover in Shanghai shares ballooned to an all-time high of 128 billion yuan ($16.5 billion), nearly a fifth higher than the previous daily record of 107.8 billion yuan set in January.
The market was hit by several negative rumors in late trade, including talk that authorities would take strong steps to cool speculative activity" Chinese economy has been growing so fast to make most economists worry.Visit money.cnn.com/2007/02/27/news/international/bc.markets.china.stocks.close.reut/index.htm?postversion=2007022709 for more information.

What happens in Chinese stock markets has impact in all over the world. This is the proof that the world stock market is so interconnected and very Volatile. Investors are now so worried.
The second day in a row US stock markets continue to worry investors "Overnight, shares on Wall Street closed in the red, with the key US Dow Jones and S&P 500 indexes falling 0.3%, while the NASDAQ lost 0.5%. " visit http://news.bbc.co.uk/2/hi/business/6410629.stm for more info.

Other than Chinese market meltdown, in the United States of America there are some other factors that have triggered fall in the stock market prices such as the Tuesday computer glitch: "Tuesday's market meltdown was triggered by a sharp fall in Chinese shares and signs of economic weakness. A computer glitch also impacted the reporting of the Dow Jones industrial average, making the big decline in the United States appear even more dramatic". This is according to CNN.

Well, here we go again. Technology can cause big trouble in the matter of seconds. We have been so reliant to technology as you can tell; the world economy also relies on technology. A small glitch can cause a big loss of money.

"Around 2:00 pm today the market's extraordinarily heavy trading volume caused a delay in the Dow Jones data systems and as a result, the calculation of the Dow Jones Industrial Average temporarily lagged behind the market decline and as we identified the problem we decided to switch over to a back-up system and the result was a rapid catch-up in the published value of the Dow Jones Industrial Average," explained a Dow Jones spokeswoman. Thanks God I don't work for Dow Jones because someone from the IT department has to explain this.

Will the world stock markets recover? Yes. The stock markets is recovering and it will continue to recover. " Gains are modest, with Dow finishing up about 50 points; Fed chief Bernanke helps reassure investors; bonds, global markets struggle" http://money.cnn.com/2007/02/28/markets/markets_0445/index.htm?cnn=yes

I think this is the right time to buy overpriced stocks but the question is how long will stock prices continue to fall? Stocks can be good investment but can also turn into a big loss in seconds when the market shakes. Although it is risky buying the over priced stocks before the stocks slump, it can be another way of dealing stocks at this time. Is this the safe way especially when everyone feels the impact of what is going on in the stock markets? I don't know.

Is Tanzania being affected by the world stock markets slide? How? This is another hard homework especially when Dar es Salaam Stock Exchange is not automated and has very few local and foreign companies listed. For instance on March 1, 2007 only four companies were listed in Dar es Salaam Stock Exchange; SIMBA, SWISSPORT,TBL and TWIGA. Tanzanian stock markets can be safe in some ways but if the major investors are suffering in their home countries, Tanzanian economy will also suffer in some way. When the world stock markets suffer, it is hard to tell how Tanzania stock market is doing. Unlike US stock markets, Tanzanian companies and stock markets are not transnational and therefore seem not connected to the world market share.

The matter of the fact is China, United States of America, Europe and other transnational corporations have invested heavily in all over the world and therefore African continent which makes me believe that when Chinese economy shakes, USA feels the impact so do Africa and other parts of the world markets.

TANZANIA-THE PLACE TO INVEST YOUR MONEY

The latest edition of a World Bank/International Finance Corporation report, `Doing Business - 2007`, ranks Tanzania and Ghana among the top ten reformers in reducing the time and cost to start businesses in the world. The report acknowledges that many governments have been taking action towards that end, with 213 reforms having been introduced in 112 countries between January 2005 and April 2006. ``During that period reformers simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit and reduced the cost of exporting and importing,`` it notes. The report compares regulation modalities and levels in 175 countries, saying Tanzania introduced electronic data interchange and risk-based inspections at customs. This made the time taken to clear imports fall by 12 days. It is further noted that Gambia, Nigeria and Tanzania registered significant cuts in delays associated with legal procedures, while Mozambique and Tanzania simplified their business licensing regimes. A whole two-thirds of African countries made at least one reform, the report reveals, adding that Tanzania and Ghana were clearly among the top reformers in 2005/06. Also to win accolades are Georgia (the topmost reformer), Romania, Mexico, China, Peru, France, Croatia and Guatemala. South Africa dropped from last year\'s position 28 to 29, while the Democratic Republic of Congo retained position 175 and Burundi dropped from 160 to 166. The drastic social and economic reforms made in Tanzania made the country jump from position 150 last year to 142 in this year\'s rankings in terms of easing the conduct of doing business, explains the authoritative report. It says entrepreneurs now follow only 13 procedures and take only 30 days to start businesses in Tanzania, while formerly it would take up to 26 procedures and 313 days to get a business licence. In the top reforming economies in the past three years, nearly 85 per cent of reforms took place in the first 15 months of a new government, observes the report, noting: ``If it is easy to set up a business, more businesses register.`` Five times as many businesses register annually in El Salvador since its reforms, while new entries jumped by 78 per cent after reforms in the former Yugoslavia Republic of Macedonia, 55 per cent in Georgia, 25 per cent in Lithuania and 16 per cent in Uganda. Reforms picked up more in Africa than in any other region in 2005/06, with Madagascar reducing the minimum capital requirement by 80 per cent and speeding registration by relocating legal clerks to one-stop shops. Ethiopia and Uganda are also listed as having followed suit in company registration, as Nigeria started allowing entrepreneurs to verify the availability of company names online. For its part, Rwanda scrapped a law originally adopted by King Leopold of Belgium during the colonial era that allowed only one notary in the entire country. Now 33 notaries are working throughout the country, reducing business start-up delays appreciably. Kenya is still ranked as the better place of doing business in East Africa but it has dropped from position 80 last year to 83 this year. A new business has to follow 13 procedures in 54 days to start operations, 11 procedures over 170 days to get licences, and eight procedures and 73 days to register a property. One will need 11 documents in Kenya to export, while it will take 25 days to export and cost the enterprise $ 1,980 per container to export. Nine documents are needed for importation purposes and imports take up to 45 days to arrive at a cost of $2,325 per container. Indicators in the report show Uganda having fallen from position 103 last year to 107 this year, with entrepreneurs having to go through 17 procedures over 30 days to start businesses, 19 procedures in 156 days to get licences, and 13 procedures in 227 days to register a property. To embark on exports, 12 documents are required in Uganda, while it will take 42 days to export with container costing $1,050. A total of 19 documents are needed for imports, and it takes 67 days to receive the goods at a cost of $2,945 per container. Rwanda retained position 158, with a new enterprise having to follow nine procedures over 16 days to set up shop and 17 procedures in 252 days to get licensed. It will take five procedures and 371 days to register a property and 14 documents to export. The exports will take 60 days at a cost of $3,840 per container. A total of 20 documents are required for imports, the gods spending 95 days on the way at a cost of $4,080 per container, notes the report. Both last year and in 2005 Africa trailed all other regions in terms of pace reform. However, this year it ranks third, behind only Eastern Europe and Central Asia and the Organisation for Economic Co-Operation and Development high-income countries. The United States\' Millennium Challenge Account also introduced conditions for grant eligibility in 2004 based on performance in the time and cost of business start-up and 13 countries have since started reforms aimed at meeting the criteria. Burkina Faso, El Salvador, Georgia and Madagascar have already qualified. Since its introduction in October 2003, the Doing Business project has inspired or prompted 48 reforms around the world, with economies ranked in respect of how easy it is to do business there. This comes on a scale of 1 to 175, with first place being the best. A high ranking on the ease of doing business index means that the regulatory environment is conducive to the operation of business.

THE FUTURE OF TANZANIA

I had dreamed of wonderful city somewhere in Africa. Dar es salaam will soon be the one as the future turns into reality by 2010 through 2020. The city of Dar es Salaam continues to grow very fast. This is another indication of great progress Tanzania's economy has enjoyed for the past ten years. Although we still have a long way to go, the future of Tanzania seems to be brighter than that of most African countries.

The picture above is another indication of high level of precise and design. Putting the city at level of any large cities in the world. Dar es Salaam will soon look like New York and London. It is just the matter of time.

Highways and Freeways are not for only America, London and other developed nations; Africa needs infrastructures as well and we will eventually be getting there. Your fancy cars and high tech vehicles have a place in Africa as well.

Above is the Dar es Salaam city to be unveiled before 2020. Planning is underway to make this dream come true.

Bellow is Kigamboni Bandarini, how does this place look like? Great! isn't it? Bellow is another work of art, design and creativity. Our people are not sleeping, they think and design day and night. You can also be part of this creativity, just ask me how?.

Kigamboni will no longer be a remote location but very well connected to the city. Kigamboni is a great place now, land is available and very affordable. Need to live by the ocean? Kigamboni is another place you might think of. Just design your mansion to enjoy free ocean breeze from the Indian ocean. Let your Mercedes Benz, BMW and any vehicle cruise above the ocean.

The city of Dar es Salaam by 2020. The new leadership continue to do a good job. Of course they have many challenges such as corruption and other concerns. But hey, they are doing their part. All this is due to good governance and dedication shown by some of Tanzania leaders eager and hungry for change. No matter what people say, our leaders are performing to the best capacity of their capability.

Thank you all, please visit my blog more often.

Jacob