Morning Report Thursday 9 July 2015
The current 34% crash in the Chinese stock market (chart 1) has created waves of selling through other markets, as investors panic to raise cash – in China yesterday, aggressive selling was witnessed in everything from eggs to sugar and even pig food. Whether the selling is because people have to cover margin calls, or simply because of the belief that the share market correction will lead to problems for the Chinse economy, the result remains the same. The important thing to remember is the collateral damage of panic selling across all markets leads to excellent opportunities to purchase great stocks at good prices. Overnight, Iron Ore plunged over 10% to fresh 2015 lows, as we have been targeting. This should lead to Fortescue Metals (FMG) reaching our targeted buy trade area – see charts 2 & 3.
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