For veterans the 30% drop of Chinese stock markets last week was not really a surprise, but this time especially young inexperienced investors have been hit hard, tells business analyst Shaun Rein author of The End of Copycat China. Over the past month 7 million new accounts were created, mostly by investors under 30 years. That might his consumer confidence, says Rein.
China´s stock traders have been lending money massively to buy more shares called margin finance. The recent drop on the stock markets has taught them a lesson and WSJ wealth editor Wei Gu sees how Monday´s upswing was caused by margin sellers, cutting their losses, she writes in Dow Jones.
The current mayhem at China´s stock market might be some short-term panic selling, but business analyst Shaun Rein points at the systemic risks in China, as a growing number of companies use their shares as collateral, he warns at Bloomberg. For US companies, the current fallout seems less problematic.
China´s stock markets got a setback as global stock-index compiler MSCI decided to delay inclusion of China at least still next year. Reason: the current 5% foreign participation is too low. But business analyst Ben Cavender expects China to open its market further this year and an estimated 20-50 billion US dollar in capital to enter the market next year, he tells Money Control.