Uh Oh China !

This is not pretty.

• In 4 weeks (since reaching their high's), Chinese equity prices on the SSE composite are down 32%.
• Lower interest rates, easier access to margin, suspension of IPO's and suspension of trading of a large percentage of companies has failed to stem the sell-off.
• Tuesday represented the largest day of margin selling in its history.
• Foreign investors are selling at a record pace.

Also, as investors face margin calls (to pay back borrowed money used to purchase stocks) they are being forced to sell other assets.

Commodity markets in China traded to their daily down limits in metals and agriculture.

Is Real Estate the next asset to be sold?

And on a global scale, investors are moving away from risk:

• Japanese equity markets traded down by 3%.
• Australian equity markets down 2%.
• US equity futures were down by close to 1%.
• US 10 year bond yields fell by .05% as investors continue to move to safety (pushing prices up and yields lower).

Add in the Greek uncertainty and there is real potential for a perfect storm to develop. 

We have been cautious for some time now (underweight equity assets) and continue to be inclined to remain that way until we get a better sense of how the dust will settle.

www.highrockcapital.ca