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Equity investors in China are having a torrid time. And the market is the world's worst-performing index so far this year, with over $2tn wiped off its value. The losses are so severe that China has lost its title as the world's second-largest stock market to Japan. So what has caused such a steep plunge?
Donald Trump's trade spat is weighing heavily on Chinese stocks. So far, tariffs apply to $37bn worth of imports, but both sides are threatening to extend them. That would be disastrous for export focused companies. The threat of an escalating trade war also spooks investors, who have pulled their money from the market.
After years of stellar growth, cracks are finally showing in China's economy. And GDP growth in the second quarter was the slowest since 2016. Some analysts say the economic headwinds mean companies no longer look cheap. And those geared towards the economy, like banks and property developers, are particularly exposed to a slowdown.
Authorities are also attempting to clamp down on the country's huge debt pile. Regulatory pressure on leverage has made it tougher for companies to refinance their debt, and defaults on bond payments are rising. That's a big risk for investors, leaving them cautious, and in some cases, heading for the exit.