In driving Asian indices to nine-month lows the current Chinese property woes may prompt an uneasy feeling of déjà vu for investors who remember previous episodes of turbulence in the country’s real estate sector and the knock-on effect they had on wider markets.
AJ Bell investment director Russ Mould said: “Officials in Beijing are doing their best to allay fears but their efforts at reassurance may fall on deaf ears for now as the crisis plays out.
“The gloom has spread to the FTSE 100 which sank 0.4% in early trading, although interestingly the mining stocks which you might have expected to be negatively impacted by any bad news from China are trading slightly higher.
“The other major cause for disquiet for the market is interest rates, and the minutes from the latest Fed meeting have thrown a cat among the pigeons by pointing to upside risks on inflation which might necessitate more rate hikes. It feels like we’re in a constant back and forth between central banks and the markets, with the former having to constantly disabuse the latter of the notion the rate hiking cycle is at an end.”
