Another week, another case of bad news emerging from China. The latest to emerge is the “shadow bank” crisis. One of China’s largest property developer – China Evergrande – has just filed for bankruptcy. All of this bad news will undoubtedly have an effect on investor mood. Even hardworking Chinese people would choose to conserve money today rather than purchase new assets or luxury items. As more negative news emerges, the deflationary theme will become more prominent in the next weeks and months.
Remember that many things are connected in the financial world. The failure of a large developer such as China Evergrande will undoubtedly have a significant impact on the Chinese financial system and even other parts of the world. Over the last two decades, outsized Chinese demand has primarily fuelled global economic expansion. However, recent data reveal that nations that rely heavily on exports to China have suffered. These countries’ non-oil domestic exports have declined significantly.
Many S&P 500 firms in the United States are also exposed to the Chinese market. Investors and traders should conduct basic research to determine which companies are involved. Also, if China’s financial woes play out over the next few months, there may be a short-term contraction in US equity markets.
During such troubled times, stock traders should look to deploy a less aggressive strategy. StockHero offers the Fishing Rod strategy that is configured for volatile market flux. Another bot that is worth mentioning is the Market Neutral bot. Since its inception last year, the Market Neutral bot has delivered near 90% win rate for users who deployed its strategy.
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