‘China is a bigger threat to investors than Greece’, adviser warns

9th July 2015


The Chinese stock market’s downward spiral is in its third week and must act as a wake-up call for investors to urgently reassess their portfolios, says  Nigel Green, chief executive of deVere Group…

Much of the world’s attention is on Greece right now.  Whilst it is right that investors keep a close eye on the Greek saga, one eye must remain firmly on the burgeoning crisis in China.

With the Chinese stock market losing a third of its value since mid June, which is about equivalent to the UK’s entire economic output last year, or in other terms the GDP of Greece every two days for the last 10 days, this has all the makings of morphing into a major financial crisis.

China’s government and regulators appear to be pulling out all the stops to support share prices – including a defacto suspension of new listings and interest rates being cut to new record lows  – although investors seem to be unconvinced that this will help.

Despite few foreign investors having much exposure to the Chinese stock markets, the meltdown matters.

Indeed, it is hugely significant because it will send shock waves 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.

As such, China, not Greece, is arguably the main cause for concern for investors right now.

Bearing in mind the potentially enormous fallout of China’s plunging markets, I would urge investors to urgently reassess their portfolios to ensure they are appropriately diversified.

Investors with the most diversified portfolios stand to lose the least. 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.

Failure to diversify a portfolio is widely regarded as one of the most common investment pitfalls – and history teaches us that diversification in these times of rising market volatility is even more essential as the tides can change quickly. Spreading your money around is a vital tool to manage risk.



1 thought on “‘China is a bigger threat to investors than Greece’, adviser warns”

  1. Jive Bunny says:

    China is little threat to markets over a 1 year perspective unless you decided to follow the herd late last year when the Shanghai and Hang Seng markets started shooting up for no reason. All that is happening now is that the market makers and speculators who engineered the rise have dumped their shares and taken their profits. This has caused investors to look at the Chinese economy which, whilst it’s OK, does not justify the the share prices, so the fall/correction will continue about another 10% – 15% before fair value is reached, anything beyond that begins to present a buying opportunity.

    China’s consumption will actually continue to grow if you care to look at the relevant numbers Nigel, let’s see what the GDP stats are looking like from December onwards……

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