China fundamentals remain excellent despite volatility

NEW Year celebrations in the Western world gave way to concerns about China as its stock market opened 2016 with a loss, triggering declines in equity markets globally.

The 7 per cent fall in China's domestic A-share market on Jan 4 was enough to trigger the country's new circuit-breaker system, halting transactions on the first day of trading in the new year and prompting government intervention to prop up stocks.

Retail investors were certainly involved in the selling but also large shareholders, particularly top company executives who hold shares in their own companies. This is why the Chinese government has put restrictions on the amount they can sell.