Investors in China have less to worry about on that front.
Economists expect Beijing to add more stimulus next year, indicating that growth will weaken further in the coming quarters.
Discount on Dow
Chinese stocks look cheap compared to those on Wall Street. Following the big sale this year, Shanghai Composite deals with almost 40% discount on Dow, according to a common valuation method used by investors.
"Following the 2018 correction, we believe that the risk has become very beneficial for Chinese stocks," said Mike Shiao, a fund manager of the investment company Invesco, in a note to clients. 19659007] There are another factor that weighs on Chinese stocks.
Large Chinese companies often promise their shares as collateral against loans from brokers. If brokers start to worry about companies' ability to repay loans, they relieve their shares, according to Diana Choyleva, chief economist at research firm Enodo Economics. This happened a lot earlier this year and intensified losses in the market.
Up to 15% of Chinese shares have been mortgaged in this way, estimates Choyleva.
" China's stock market is currently in the crush of a pledged division, "she said.