Yes, stocks in China posted their largest daily drop in eight years on Monday. But the latest pullback doesn’t mean investors should drop what they’re doing and throw money into China. The benchmark Shanghai Composite Index fell 8.5 percent on Monday. The selloff, which began in mid-June, was sparked by too many investors buying stocks on margin. The index is down 28 percent since its June 12 peak. Scott Wren, senior global markets strategist at Wells Fargo (WFC) Investment Institute said it’s a mistake to just hold China stocks by themselves, given the volatility. ‘Don’t look at China by itself,’ he said. ‘I don’t think China should be a significant size of any retail investor’s portfolio.’ Ian Winer, head of equity trading at Wedbush Securities, echoes the concern and remains worried about the unprecedented government action taken to stop the bleeding in China stocks. Earlier this month, Chinese officials banned large shareholders from selling stocks for six months and suspended trading in half of its stocks. On Monday, a report from Dow Jones said China’s state government will purchase various stocks, in an effort to stabilize its markets. ‘I would recommend investors stay out of China all together,’ Winer said. ‘The government has now gone into uncharted territory and even that didn’t stop the current selloff.’ Meanwhile, Mark Luschini, chief investment strategist at Janney Capital Markets, said investors should remain cautious for now, as it’s unclear exactly what’s taking place in the market at the moment.
Subscribe to TheStreetTV on YouTube:
For more content from TheStreet visit:
Check out all our videos:
Follow TheStreet on Twitter:
Like TheStreet on Facebook:
Follow TheStreet on LinkedIn:
Follow TheStreet on Google+:
source
