A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks.
News China property giant Country Garden had missed bond payments as it racked up big losses was always likely to prompt selling in Asian markets and that’s fed through to the European open.
AJ Bell investment director Russ Mould said: “This latest calamity is reflective of a recovery which has not lived up to expectations since the world’s second largest economy ditched zero-Covid measures at the end of last year. The usual catalogue of names with Chinese ties were under the pump including Burberry, Standard Chartered and Prudential. The one silver lining for the West may be a deflationary impact from China’s woes which helps in the battle against inflation.
“The higher than anticipated rate of US producer price inflation reported on Friday – often a good indicator of the trajectory of consumer prices – is helping to sour sentiment and raises the stakes ahead of UK CPI figures on Wednesday this week.
“A significant fall to 6.8% is expected, anything short of that could prompt another surge in gilt yields – drawing groans from anyone set to remortgage or take out a new mortgage any time soon.
“Market research and data analytics firm YouGov is the latest UK-listed firm to consider a listing in the US – presumably in search of the higher valuations typically afforded to shares across the Atlantic. YouGov has arguably entered a new phase of its development following the recent acquisition of Germany’s GfK consumer panel business.”