Market Overview

Greece Is Bad, But China Is Much Worse

Greece Is Bad, But China Is Much Worse

While the uncertainty over the fallout from a potential Greek exit from the Eurozone continues to draw the attention of global markets, the head of the world’s largest independent financial consulting firm believes that China is the true cause for concern.

In a new article, deVere Group CEO Nigel Green explains why the crisis in China should serve as a “wake-up call” for global investors.

How Bad Has It Gotten?

The statistics on the Chinese A-shares market collapse are staggering. The Shanghai composite has lost $1.96 trillion in market cap since June 12. That number is comparable to the entire GDP of India. Incredibly, the Shanghai index is down 32 percent in only 17 trading days.

Related Link: Could Greece Find A Safe Haven In U.S. Markets?

Why The Meltdown Matters

So far, the collapse in the Chinese markets has had a minimal effect on the U.S. market. The S&P 500 is down only 0.75 percent over the past month. However, according to Green, investors shouldn’t get too comfortable with the idea that they are isolated from the problems in China.

“Despite few foreign investors having much exposure to the Chinese stock markets, the meltdown matters,” Green wrote. “It will send shockwaves throughout global capital markets, not least because China is the world’s second largest economy and one of the largest consumers of commodities and other goods sold by other countries.”

How To Protect Your Portfolio

deVere Group International Investment Strategist Tom Elliott told Benzinga that investors shouldn't try to trade the wild swings in the Chinese markets because there is too much uncertainty involved.

"Don't try to 'play' it. If you get it right it will be by luck. We ‎can't predict what measures the Chinese authorities will bring in to stabilize the market, or if they will work," Elliott explained.

According to Green, diversification is the best way for investors to insulate themselves from China.

"Geopolitical events like this highlight once again the need for multi asset investing, across regions and asset classes, as a way of reducing the adverse consequences of such events," Green concludes.


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Posted-In: China deVere Group Greece Nigel GreenAnalyst Color Exclusives Markets Analyst Ratings Best of Benzinga

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