China’s Focus on Bubble Risks Is a Warning Sign for Stock Market
- CSI 300 drops after official discusses need to cut leverage
- Deleveraging has particular resonance in Xi Jinping’s China
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For investors fretting about an end to the era of cheap and plentiful debt, China just provided another reason to worry.
The nation’s top banking regulator jolted markets on Tuesday with a warning about the need to reduce leverage amid the rising risk of bubbles globally and in the local property sector. The impact on Chinese stocks was swift: the CSI 300 Index fell as much as 2.1% to lead declines in Asia, while Kweichow Moutai Co., the biggest contributor to gains during 2020’s stimulus cycle, tumbled almost 5%. China’s largest stock has lost more than $100 billion in nine days.