TSX, the major stock exchange in Canada has seen an increase over the past few days on account of optimism on Chinese economy. China, which was able to negotiate the global recession of 2008, has seen a slowdown in the last couple of years. Many financial experts had commented that the gold run of Chinese economy had come to an end. However, the recent news has been bullish on China, which in turn, has affected the sentiments in the Canadian markets. In August this year, value of commodities had seen an increase on the basis of news reports originating in China that the country will be able to meet its 7.5% growth target. China’s booming economy needs raw material on a large scale, and the demand has led to a steady increase in the values of metals on major stocks exchanges in Canada.
It is not only the increased demand for commodities that has pushed the Canadian stock markets. Chinese stock markets have also seen a recovery since June this year, and this has created a feeling of optimism among investors in Canada. China is one of the most important trade partners of Canada, and a slowdown or growth has an effect on the Canadian economy. The recent good news from China had an impact on the American stock market as well, with Dow Jones Industrials closing above 15,000 for the first time since August 23. Nasdaq too, benefited from the Chinese optimism and closed in the green. Part of it was also attributed to the news that Japan – the other big economy in Asia – had been awarded with the opportunity to host the 2020 Olympics.
China, which has in recent times, presented itself as one of the most important players in the world economy, has strong economic ties with Canada. Although the United States of America still is the number one trading partner of Canada, the sluggish recovery and chances of another slowdown have meant that Canadian stocks haven’t had any exciting news for quite some time now. China, on the other hand, is increasing its dominance in the world economics, which analysts say is a precedent to the eventual military domination it will have in the next couple of decades. Chinese state-owned companies, with virtually unlimited access to capital, are investing heavily in European and American markets. Chinese investment is seen as a catalyst for the major economies in Europe, and this is one of the prime reasons why the Chinese economy is being monitored much more closely by the experts.
There is widespread optimism that China will not only recover fully from its recent slowdown, but it will also pickup its characteristically high growth rate in the years to come. And this is something that will augur well for the Chinese economy.