7th September 2015

BNY Mellon: Making sense of the market "fret-fest"

The gyrations of global stock markets over the past week have certainly given investors some food for thought, but stepping back and putting them in context can help avert unnecessary panic.

China’s battered equity markets regained some ground in the final days of August inspired perhaps by reports that Beijing’s market rescue fund was raising more money.

Although the share price falls had been interrupted the debate about their significance has not.

To make sense of a stock market plunge, you have to decide whether it is reflecting economic woes, anticipating them, or causing them. Some people worry that the dramatic tumble in China’s markets in recent weeks is a forewarning of economic dangers to come. But that gives China’s stock markets too much credit. These are the same markets that attracted ridicule earlier this year for their bubbly detachment from fundamentals. One should not set too much store by the divinatory powers of China’s equity investors.

See full article on BNY Mellon website