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‘Black Monday’ spells trouble for China
After China’s stock market experienced its biggest single-day loss in eight years, investors are worried this could lead to an economic downturn and put an end to China’s imports of luxury drinks brands.
A man looks at a stock quotation board outside a brokerage in Tokyo on Monday © Reuters
After the Chinese stock market collapsed 8.5% cent overnight – the biggest fall since 2007 – global trading floors followed suit, wiping hundreds of billions off the world’s financial markets.
Fears of a major economic downturn had investors panicking, and for China this could see an end of importing premium alcohol brands, especially high-end whiskies and wines.
The world’s biggest market for alcohol is still China, but growth in this sector is now projected at 16% a year compared to the 21% from 2006 and 2011. Direct exports of Scotch whisky from the UK to China reached an all time high of more than US$110 million in 2012, but this fell 23% by 2014.
In a statement to the International Business Times, David Frost Scotch Whisky Association CEO attributed the downturn to “the pressure of Chinese government austerity measures and economic slowdown.
“We constantly monitor the current economic and financial situation in China and its potential impact on Scotch exports,” he continued.
The austerity drive kicked in three years ago when President Jinping announced a campaign to curb government spending and corruption by a ban on buying luxury items such as premium wine and whiskies and extravagant meals for government and army officials.