Michael Every of Rabobank says the whole equity and Yuan weakness is also suggestive that the Chinese government wouldn’t be buying into equity as to artificially support the market.
With Shanghai Composite Index falling more than 5 percent, Michael Every of Rabobank and Ben Cavender of CMR believe this is being driven by local retail investors selling outrather than foreigners.
Both Every and Cavender think this could be indirectly positive for India, but with a rider that there are very few people who will take money out of one emerging market- China- and put it into another (India).
Speaking to CNBC-TV18, Every says the whole equity and Yuan weakness is also suggestive that the Chinese government wouldn’t be buying into equity to artificially support the market.
In this volatile phase globally, it is the safest to be in cash, says Every, adding, “This Chinese equity stress is just a start; it is going to be a much broader period of global turbulence.”
Transcript to follow.