Are You Riding China’s Stock Market Roller Coaster?


Nov. 20 2020, Updated 3:16 p.m. ET

China’s stock market: A roller coaster

China’s stock market performance lately has been similar to a roller coaster ride. Riders’ enthusiasm on a roller coaster builds as the ride climbs, reaches its peak, and converts to panic and fear as the machine starts to descend.

[marketrealist-chart id=521738]

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From a buying spree to panic selling

Similarly, investor sentiment in the Chinese stock markets was characterized by enthusiasm when the markets were rising at an impeccable pace from January to mid-June to reach their peak on June 12. The Shanghai Composite index was at the 5,166.35 that day. Then sentiment transformed to fear and panic as the market came crashing down. The Shanghai Stock Exchange (or SSE) composite index was at 3,877.80 on July 10’s close.

The iShares China Large-Cap ETF (FXI) tracks large-capitalization Chinese equities that trade on the Hong Kong Stock Exchange. The ETF has seen a similar wave. So has the Deutsche X-trackers Harvest CSI300 CHN A (ASHR). Chinese ADRs (American depository receipts) like Alibaba Holdings (BABA), E-Commerce China Dangdang (DANG), and China Mobile (CHL) have all followed the upsurge and the crash with the broad market.

You may want to read our series China Stock Market Crash: Could India Be the Next China?

Markets recovering in China

On Monday, China’s shares were up again, reversing (to an extent) a massive sell-off in the previous week. The SSE Shanghai Composite Index was up 3% at 4,003.98, the Shenzhen Composite Index gained 4.3%, while the small-cap ChiNext rose 4.9% as it opened to trading on Monday, July 13. However, given the recent crash, investors, and especially emerging market (EEM) investors, remain wary of their holdings in China.

Meanwhile, the European Union finally agreed to bail out Greece, but at what terms? Read  to find out.

Stay updated on our latest analysis on China, India, and other emerging markets (EEM) by visiting Market Realist’s Emerging Market ETFs page.


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