Investoid

China’s stock markets dropped substantially in the past 24 hours, and the global markets have taken notice. Right now, the TSX is down about 1.5%, while the Dow and S&P 500 are down just under 1%. I thought these drops would be a bit larger, but I think it demonstrates how optimistic investors still are about the unending growth machine that is China.

As the article indicates, the Chinese market and economy have been relatively volatile recently. With growth rates not seen since 1995, the Chinese government is worried about overlending as well as excess capacity.

Is this a buying opportunity for Emerging Markets ETFs, or for our indices as well? While this pullback is attractive, I’d be hesitant to buy on this drop. It could be a harbinger of things to come. I suspect there will be a relatively quick rebound, but I think that it’s prudent to wait and see if any other negative news comes out before diving in. Chinese stocks have had so much of a runup that there could be significant downside. Still, it’s worth keeping an eye on these markets and look for a good buying opportunity.