There were several reasons for the overnight wipe out in miners but they add up to one thing in the end. The China “put” – that is the assumption that China will just build more stuff whenever growth slows protecting the downside for commodities – just got destroyed.
The first blow was Xi Jinping’s responses to questions in the WSJ:
6. China has had a tumultuous summer, with plummeting stock markets, a devaluation of the renminbi and signs of economic weakness. Many investors around the world wonder if the Chinese economy is weaker than the official figures show and if the government is sufficiently in control. What’s your assessment of the economy and what is being done to shore up confidence among Chinese and global investors?
