The Chinese stock market is melting down.
For example, the iShares Trust - iShares China Large-Cap ETF FXI has lost 15% of its value in the last month. This ETF invests in large-cap stocks that trade on the Chinese exchanges.
This has been largely overlooked by members of the financial media, but it could eventually put investors in U.S. equities at risk. Some analysts believe there is a chance that it spills over.
Many of the largest shareholders of these Chinese stocks are in the United States. There’s a chance that it will trigger margin calls, and investors will sell their U.S. equities in order to meet them. This could put pressure on the domestic stock markets.
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