Beijing's Crackdown Ruins July for Investors Everywhere
China’s regulators are trying to calm markets but there will be ramifications around the world. It’s going to be a nervous summer.
A lot of coverage.
Photographer: STR/AFPForget your plans for a quiet, relaxing summer. The stock markets of the world's second largest economy are tumbling; and when Chinese equities turn bearish, it can be brutal. At one point during Hong Kong trading day on Wednesday, the Hang Seng Index fell close to 20% below its February peak.
This is unlikely to be a localized event. The big fear is a rerun of China’s stock market rout of summer 2015 which saw a 45% selloff. There were further major selloffs in early 2016 and 2018. The knock-on effect for emerging markets then saw average credit spreads rise by a quarter and the MSCI emerging markets equity ETF fall by over 25% in the second half of 2015 into early 2016. China’s latest stumble could lead to skinned knees around the world.