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China: Looking Past the Headlines

Three China watchers at Morningstar's ETF Conference discussed what's behind the current volatility, what's next for the country's economy, and if investors should take a long-term stake.

There's been no shortage of China headlines recently, from the currency devaluation that roiled markets in August to the extreme volatility in the onshore stock markets as well as the continued opening up of the market to foreign investors. KraneShares' Brendan Ahern, Dodd Kittsley from Deutsche Asset & Wealth Management, and Morningstar's Dan Rohr spoke at a panel Thursday morning moderated by Morningstar's Jackie Choy at our annual ETF Conference. The panelists discussed what's been driving some of these big moves as well as how it could impact investors.

What's Driving Stock Market Volatility?
All three panelists agreed that the big runup and subsequent fall in the Shanghai and Shenzhen markets was not being driven by the underlying economic fundamentals of China. Dan Rohr pointed out that the Chinese economy has been decelerating through the whole period of this volatility and that the trajectory of the decline hasn't changed much either. He sees a change in expectations as the big driver along with the "basic set of animal spirits."