The dreadful opening week of the Chinese markets for 2016 has reignited concerns about the world's second largest economy. What's more is that these concerns are no longer contained within China, like they used to be. Thanks to capital account liberalization and global investors expressing "China concerns" via proxies, financial market volatility from China has precipitated contagion across the globe – a phenomenon similar to last August. China (the PBoC) and the US (the Fed) were two major sources of market volatility last year, and this is set to continue in 2016. For investors – invested in China or not – this increased correlation means that understanding China's economy and macro policies is no longer a plus, but a necessity, to navigate the choppy currents of financial markets in 2016.
Source : AXA Real Estate