An excerpt from my article published at SeekingAlpha.com.
Fear is in the air
It used to be “when America sneezes, the world catches a cold,” but recent market action shows China may be the new snotty-nosed kid on the block. I mean the now-notorious coronavirus. Since its outbreak, the news flow has been frantic and markets are acting like there’s more than just viruses in the air.
Chinese stocks, as measured by iShares Large Cap China ETF (FXI) were down by 11% in just a couple of weeks. Prior to then, the Chinese market was on a 20%+ rally from its August 2019 lows. Global markets are also following China’s lead lower.
Figure 1: Chinese (FXI) vs World Equity Markets (ACWI)
For those paying attention, you know I’ve been wary of elevated global stock market valuations, but have also relatively favored China for more than a year. The question is how much of that rationale has really changed?
See the full article at SeekingAlpha.com.
Victor K. Lai, CFA
The Bellwether Blog 
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