Some Perspective on the Size of Chinese Equity Market Losses

July 23, 2015

Over the last month, the Chinese equity market has been a cause of concern for investors and it is impossible to ignore its impact on recent market volatility. In an effort to provide some perspective on the size of recent market losses in relation to Chinese consumers, this week’s chart of the week compares the size of the market cap loss to household assets represented by household deposits, 2014 GDP, household financial balance sheets, and household total balance sheets. As shown above, the Chinese equity market cap loss only represented 12% of household financial balance sheet assets which include stocks, bonds, and cash. Additionally, the market cap loss only represented 5% of total household assets which notably include personal real estate. Although the recent loss in the Chinese equity market was not insignificant, at this point in time the overall effect on the Chinese economy is bearable and should not be considered catastrophic.