Chinese leaders may be undermined as investors suffer stock market slide

China’s stock market crash has wiped more than $3tn off the value of its companies in less than a month, a collapse likely to hinder promised efforts to reform the economy and which may undermine the standing of leaders including the Chinese president, Xi Jinping. The country’s wider economy is relatively well insulated, despite the astounding scale of the losses, both because the value of shares traded is a far smaller portion of national income than in the west, and because they have soaked up a lesser percentage of household assets. “What China has is not contagious, at least not directly,” Patrick Chovanec, chief strategist at Silvercrest Asset Management, and former professor at China’s influential Tsinghua University, said on Twitter. “I’d argue foreign financial exposure is limited and China’s capacity to consume will remain resilient.” The greater risk may come from the heavy-handed way the government has handled the dramatic slide, which began in June and gathered pace this month, and the impact on national sentiment because so many of the losses have fallen on small-time investors. Across most of the world, stock markets are dominated by professional investors, but in China putting money into the markets had become a… Read full this story

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