China Stocks Are Tumbling Again. Unlike 2015, World Doesn't Care

  • Rout wipes out $560 billion from country’s stock market
  • Shanghai benchmark now near most oversold level since 2013

China, Others Face Crisis in 1-3 Years, Says Steve Keen

Global investors are still shaking off a rout that’s erased more than $560 billion from the value of Chinese equities, making them the world’s worst performers since mid-April.

Below are four charts showing just how deep the pain has spread in China’s mainland. Outside of the nation’s borders, investors are indifferent to the weakness in the second-largest equity market after the U.S. The MSCI All-Country World Index is near a record and the VIX Index, the so-called fear gauge for U.S. stocks, is close to its lowest level since 1993.

Remembering The 2015 Rout

The ChiNext small-cap gauge, seen as a barometer for Chinese stock-market sentiment, has taken quite the hit this year, down 9.7 percent and close to its lowest level since February 2015. The selloff erased all that was left of a rebound from a low later that year, after a bubble in China’s markets burst.

Fading Momentum

A technical indicator suggests the Shanghai Composite Index has fallen too far, too fast. The gauge’s relative strength index dipped further below the 30 level that signals to some traders an asset is oversold, and is close to levels not seen since 2013. Chart watchers are still waiting for that rebound.

Lagging Rest of World

The benchmark for yuan-denominated shares has lost 6.9 percent in the past month, while global stocks are up 2.8 percent. That divergence means the Shanghai measure is trailing the rest of the world by the most since 2014.

Diminishing Value

Chinese stocks now make up less than 9 percent of the world’s equity market, the smallest slice since June last year. The value of global equities is near a record $73 trillion reached earlier this month.

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