Chinese stock market (SSE Composite Index SHA:000001) has delivered staggering returns of 120% last year but lost approx 24% valuation in shares since june’s peak and Shenzhen down 30% . It wiped out $2 trillion ( approx ) of investor’s wealth since june , it is equal to 50% of United states total debt . Its been acting weird and extremely volatile since june , in 1 hour its up 5% and next its down 5% , intra day its moving 10-12% and loosing/gaining trillions of dollars in just some trading hours . So should we panic as our markets also may correct ? Lets find out
1- Best thing about china’s stock market that 98.5% investment is from china only and rest of the world holds only 1.5% so there is not anything like most hedge funds or investor gonna loose if china tanks further .
2- Despite its 24% valuation losses china’s markets are still up approx 20% since January 1st 2015 , so you dont need to worry about that 10% intra day swing at least now .
3- Too many chinese started shares trading and this year Stock brokers opened near 4 million trading account in a week , so there is lot of money in market which belongs to small investors and they may panic if market falls further .
4- New investors who entered this year in stock market and some of old fellows who were betting big in china’s stock market triggred their margins call and they lost their holding as they were holding with big leverage .
5- For now world market did not effected but if china market falls further 20-30% conditions may chance as china has ties with almost every country on planet and it could effect world economy .
Conclusion : For now we dont need to worried about china’s wild movement but if it falls further we may have problem and we have to be cautious if chinese market falls further .