Stock market sell-off raises concerns for China’s exports amid US recession fears

Some of the worst-hit stock markets regained ground on Tuesday following Monday’s global sell-off, but concerns remain for China’s key exports

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Why investors can expect more market volatility after recent global stock sell-off

Ji Siqiin Beijing

Published: 11:30pm, 6 Aug 2024Updated: 8:57am, 8 Aug 2024

Warning signs are flickering for China’s economy – of which the export sector has been a major growth engine in the first half of the year – after concerns about a recession in the United States triggered a massive global stock market sell-off at the start of this week.

A spate of global macro events – weak job data in the US, rising tensions in the Middle East, unsustainable valuations of artificial intelligence-driven tech stocks and policy tightening by the Bank of Japan – wiped out more than US$6 trillion from stocks worldwide on Monday, with leading US equity benchmarks suffering their worst days in two years.

While some of the worst-hit markets regained ground on Tuesday, with the key index in Japan rebounding over 10 per cent, it is viewed as too early to reach a conclusion on whether the turmoil has passed, or if it is a real prelude to a recession, said analysts.

“For now, we still regard it as a market fluctuation,” said Ding Shuang, chief economist for Greater China at Standard Chartered Bank.

“But if it really signals a US recession, it means the global economy would also be dragged down, so China’s external demand would slow down.”

Economists at Goldman Sachs on Sunday raised the probability of a US recession in 2025 from 15 per cent to 25 per cent.