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Reality is finally dawning on investors: we are on the verge of a global trade war. As a consequence, last week, the Dow Jones Index closed on Thursday for the eighth day in a row with a loss. A rather rare event, since such persistent losing streaks do not occur often. Both in 2008 (during the Great Depression) and in 2011 (during the European sovereign debt crisis), the Dow Jones had an equally bad losing streak. Yet, ever since, a losing streak as the one we observed last week has not occurred.

In China, things look even worse and have actually become considerably worse since the beginning of the US-China trade war: the Shanghai stock index is down by almost 20% year to date. So far, the Chinese stock market has been one of the worst performing stock markets in the world in 2018. What is happening beneath the surface in the Chinese economy?

The (Enormous) Problem in China: Why the Chinese Stock Market Is Marking Multi-Year Lows

Source: UFM Market Trends, Bloomberg

Source: UFM Market Trends, Standard & Poor’s

Largest Risks in China are the Overleveraged State-Owned Enterprises (SOEs) and China’s Dollar-Denominated Debt

Source: UFM Market Trends, Bank of International Settlements

The Dow Jones Index Closes for the Eighth Day in a Row in the Red; When Was the Last Time the DJIX Suffered an Eight-Day Losing Streak?

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