China Deleveraging Pain Puts Investors on Contagion Alert

Source: Bloomberg

China Deleveraging Pain Puts Investors on Contagion Alert

  • Emerging markets would be most vulnerable, Invesco’s Uy says
  • ‘We don’t yet see it as a big risk-off event,’ says Aberdeen

What may be shaping up as China’s most concerted effort yet to bring its credit boom under control is spurring investors to gauge any contagion to broader financial markets, a-la 2015, when Chinese turmoil caused global ructions.

Policy makers’ moves to crack down on leverage have already wreaked about $500 billion of financial damage domestically, and — along with evidence economic growth may be peaking — are dragging on industrial metals and iron-ore prices globally. The key metrics to watch now: the yuan’s exchange rate and cross-border capital flows. (read more…)