Chinese takeaways: The big risk is taking this seriously; Shares’ rout will speed capital flight; Move along, nothing to see

In NBR Print today: NBR journalists and columnists examine what happened in the Chinese and other global sharemarkets this week. Kicking off our coverage was Tim Hunter, who wrote that this week’s sharemarket rout had brought forth expressions of alarm “but the real danger is if western policy makers are persuaded that it is more important than Kim Kardashian’s arse.”

He argues China’s stockmarket has been inflated well beyond its rational level, encouraged by a government trying to resolve the unintended consequences of its huge economic stimulus.

“A correction is welcome. Even after its precipitous fall, the Shanghai Composite is well up on a year ago.”

Meanwhile Michael Coote found China’s sharemarket had been in the midst of a ‘slow-mo’ crash for months “but it’s only been in recent days that it sufficiently sped up to attract popular attention and anxiety.” He says understanding what’s underpinned the upheaval involves getting one’s head around the structural complexity of China’s stock exchanges. To this end, he provided an ABC of China’s A, B and H shares, why “Uncle Xi’s bull market” has gone to the bears and how this will affect a property market near you.

Shoeshine must be getting long in the tooth, given the free-falling global sharemarkets of the past week haven’t so much caused her alarm so much as made her nostalgic for the financial crises of yesteryear. The crash of 1987, the bursting bubble of 2000, the GFC’s kickoff in 2008 – now those were properly awe-inspiring examples of unfolding economic omnishambles. The collapse of China’s fledgling sharemarket, however? Meh. It’s little more than a reminder that it’s well past time to normalise global monetary policy.

Jason Walls reports  that one of New Zealand’s most successful businesswomen has taken a swing at the country’s biggest company.  NBR Rich Lister Diane Forman has revealed she gave Fonterra the tasty opportunity of first right of refusal for her ice cream company, New Zealand Natural, before she sold it offshore. “I thought, as a New Zealander, it didn’t seem right to be selling my brand out of New Zealand.” But Fonterra didn’t even do her the courtesy of having a coffee and a chat before declining the chance to buy into a value-added dairy brand, she says.

According to Ms Foreman, this apparent arrogance is just one of the co-operative’s many problems.

Calida Smylie reports that income-producing defensive stocks are performing particularly well this reporting season, thanks to their greater immunity to the economy’s slackening pace.

About 40 companies have released results during the largest of the quarterly earnings seasons – with another 10 or so, mainly retailers, left to go.

Economics editor Rob Hosking reports changes being considered by the IRD “amount to a tariff on imported capital” and could have a major contractionary effect on the economy.

The property market is on many investors’ radar. Some dive in succesfully, while others flounder about. For both, this is a fickle and difficult sector in which to operate – and it’s hard to know who to approach for advice.

One expert on hand to proffer it is Sir Robert Jones, who despairs “at the steady flow of trouble people, seeking my advice, following ill-thought commercial property investment rationales.”

Fortunately, he says, “this extraordinary lack of deep investment analysis in the global commercial property sector means it’s easy to make fortunes.” Sir Robert’s view and those of property reporters Chris Hutching and Sally Lindsay join commentary from major companies in the business in this week’s NBR Special Report: Investing in commercial property.

All this and more in today’s National Business Review. Out now.

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