Heading into Canada Day, it doesn’t exactly look like it’s going to be a relaxing summer. For one thing, it’s turned cold and rainy here in Toronto which is a major bummer for local kids (including mine) as they try enjoy the first summer weekend.

But it’s not the weather I’m worried about—it’s all the volatility cropping up in the markets. Greece aside, the big story last week came out of China, where investors are experiencing a major market slide.

Last week, the largest U.S. ETF tracking mainland Chinese stocks took a hit that quickly wiped out a month’s worth of gains. The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF slumped 5.1% to US$47.81 on Thursday, putting it on track for the first monthly drop since January as Bloomberg reports.

The price of Chinese stocks has dropped as investors worry about soaring valuations which many now believe aren’t sustainable. While the Shanghai Composite Index closed at a seven-year high on June 12, last week it experienced its biggest weekly drop since the financial crisis.

This is very bad news for individual investors in China—as The Globe and Mail pointed out last week, they account for more than 80% of trading on mainland exchanges. Big losses could hurt a lot of small investors—not to mention those who borrowed to get in on the stock boom.

The Globe reported on the following sad story that kind of sums up what a lot of smaller investors are dealing with in Mainland China right now:

Wang Yan is starting to regret that day two months ago when she gave into temptation and piled into the Chinese equity market.

“Back then, I thought I must be stupid not investing in stocks as making money out of it was so easy,” said Ms. Wang, 26, who works for a publisher in Hangzhou, in China’s eastern Zhejiang province. “Now I think I’m even more stupid as the money I lost almost equals my one-year salary.”

This market meltdown could have a significant effect on a country that’s looking to its emerging and growing middle class for economic growth.

Over the coming weeks and months, we’ll have to see how it plays out.

In the meantime, a lot of us here in Canada are headed off on holiday. So I’ve put together a volatility reading list to keep you entertained on the dock or wherever you’re having fun:

Happy Canada Day!

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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