Welcome to The Dividend, Fortune’s new weekly investing column, available exclusively to our subscribers. Each week we’ll dig into an area of the market that’s making headlines and help you figure out what deserves a place in your portfolio—and what doesn’t.
China is too big to ignore for investors.
China is the second-largest economy in the world, making up about 17% of worldwide GDP, surpassed only by the U.S. It was the only major economy to post growth figures in 2020. The Chinese equity market, while young, topped the $10 trillion threshold last year, and its corporate fixed-income market is around $9.4 trillion.
This kind of growth has been appealing to investors. Through December 2020, China's CSI 300 Index, which tracks 300 A-share (read: domestically traded in China) stocks listed on the Shanghai or Shenzhen stock exchanges, trounced the S&P 500:
But the numbers aren’t too pretty right now, as a series of sweeping regulatory actions from the government signals more intervention lies ahead—at least for certain sectors. China has homed in on its big tech companies, and it's seeking to address quality-of-life issues like gaming addiction, or cracking down on education companies trying to profit on after-hours tutoring.
All of this has spooked markets. Nearly $1 trillion of value on the Chinese exchanges had disappeared. Stocks of China’s biggest tech companies have been plummeting: ADRs of Alibaba Group were down nearly 24% at market close on Sept. 1 from the...
Read Full Story: https://fortune.com/2021/09/03/what-the-china-crackdown-could-mean-for-your-portfolio/
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