China’s stock-market collapse is not over yet

The collapse in China’s stock market is far from over despite the Shanghai Composite Index having fallen nearly 30% in about a month and experts are urging investors to bail out while there is time.

“We continue to advise investors to consider not holding individual positions in Chinese stocks but advocate for fully diversified exposure to emerging-market equities,” Peter Donisanu global research analyst at Wells Fargo Investment Institute said in a report to investors.

The Shanghai Composite closed at 3,727.12 on Tuesday, slumping from its seven-year high close of 5,166.35 on June 12.

The selloff in Chinese securities was triggered by a move by Chinese authorities in early June to tighten margin-trading and short-selling rules, making it more difficult for investors to borrow money to play the stock market.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, blamed “government cheerleading” and easy money via loose monetary policy as the two main culprits behind the stock-market bubble.

With the Shanghai benchmark having crashed below 4,099, which J.P. Morgan had earlier pegged as a short-term support level, analysts now believe there is very little to halt a further decline in the index.

Full article: China’s stock-market collapse is not over yet (MarketWatch)

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