DM Portfolio Commentary – Q3 2021

Financial stress in China adds to inflation worries – As the third quarter was drawing to a close, equity investors were served a jolt of long-forgotten volatility when the Dow dropped by more than 600 points in a single day. The catalyst for the plunge was the revelation – or at least the acknowledgement – that one of China’s major property developers was buckling under the strain of a mountainous debt load and would struggle to complete its vast array of projects. In a country where households are uncommonly levered to real estate and construction accounts for an outsized portion of GDP, this was understandably worrisome. Of particular concern in the west was the possibility that cascading property and debt markets in China would reach into our financial systems, much like the sub-prime crisis had imperilled major banks and lenders well beyond US borders just over a decade ago.

Click here to read more:  DM Portfolio Commentary – Q3 2021