Recently, in the city of Tianjin, the Chinese PM Li Keqiang while addressing a World Economic Forum gathering said “It's hard to avoid short-term volatility in China's capital markets, but we won't allow roller-coaster rides and drastic changes in the capital markets".
He went ahead in the speech to wish the European Union and Britain a stable and prosperous future but not without ringing warning bells saying "against the backdrop of globalization, it's impossible for each country to talk about its own development discarding the world economic environment." (Reuters)
The interconnectedness of world economies today has been accelerated by the globalization of markets, goods, services and people more than any other time in human developmental history. The financial market turmoil continued into its second day after the historic Brexit vote last Thursday.
The British pound hit all time low since 1985 to trade at 1.31230 against the greenback. Approximately $2T dollars have so far been wiped out of the market as investors repatriate their capital from risky assets in the wake of uncertainty created by the Brexit vote results.
Wall Street Journal headline reads “Next Fallout? ‘Brexit’ Tests China’s Precarious Balancing Act”. Apparently, the Chinese Premier paid a short visit to the Central bank Policy makers bearing one message: “The Yuan must be kept stable”.
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