The Chinese A shares have had their biggest 15-day plunge in 20 years. In this period, total loss is equivalent to the whole UK economy in 2014. The crash was likely triggered by an IPO wave and institutional investor withdrawal and intensified by leverage and margin calls. Nordea’s senior analyst Amy Yuan Zhuang comments:
- The crash will likely have limited impacts on the Chinese and global economy, unless it triggers a burst of the credit bubble.
The last 15 days have not been easy for stock investors in China. After gaining about 125% in eight months, the Shanghai and Shenzhen A shares, mainly held by domestic investors due to regulations, reached the peak in mid-June. Since then they have fallen 30%. We need to go back to mid-1990s to see a larger 15-day loss. Total loss measured in value is about USD 3tn, same as the UK’s economy in 2014.
Read more in a comment by Amy Yuan Zhuang.