Grindi
What Happened
The MSCI China All Shares Index declined 1.1% in the quarter as the real-estate downcycle and a sharp slowdown in retail spending continued to weigh on markets.
Real Estate was among the worst performing sectors in the quarter as property developers continued to struggle with declining sales and high leverage. China Vanke (OTCPK:CHVKF, Vanke), the second largest developer by sales, announced a sharp drop in earnings in a weak demand environment, which exacerbated questions about the company’s ability to service its debt and eventually led to a downgrade of its credit ratings to junk by Moody’s and Fitch. Though there are reports that the six largest state-owned banks could bail out Vanke through a syndicated loan, government policy measures so far—including lowering mortgage rates and removing some financing restrictions—have not been significant enough to arrest the sector’s decline.
The Healthcare sector also performed poorly. A US Congressional…
