Investors are pricing in a crisis.
With concerns about a hard landing in China playing the starring role in the risk-off environment that’s dominated so far in 2016, it’s no surprise that equities in the world’s second-largest economy have fared particularly poorly.
In local-currency terms, the Shanghai Composite is down almost 17 percent this year, far underperforming the MSCI World Index’s 7.5 percent retreat.
It was an interesting week last week. For one thing, Chinese company Alibaba debuted as the largest IPO in the history of the world. Larger than the Initial Public Offerings of Facebook, Twitter, Google, Apple, and Microsoft combined. At the same time, there was a Senate report indicating that China hacked U.S. military contractors in a significant way at least twenty times in the past year. In America, we celebrated the success of Wall Street, earning $300 million or so in underwriter fees. In China, they celebrated finding a path to dethrone American technology dominance (from the official Chinese News Agency): Continue reading