Matthews Asia: Surviving China's Volatility

Surviving China’s Volatility by Andy Rothman, Matthews Asia

“The most important thing to recognize is that Chinese equity markets do not reflect the health of the Chinese economy”

Christine Lagarde, Managing Director of the International Monetary Fund was once quoted as saying, “Markets love volatility.” She may be correct in the abstract. But right now, investors in Chinese equities would certainly love a bit less volatility.

2016 is likely to be a year of volatility in China. With the government apparently keen to continue intervening in its A-share market, we can expect continued volatility there. And with the manufacturing and construction part of the economy set to grow more slowly, there will be macroeconomic volatility. As privately owned firms take...