Put simply, Americans are afraid of Chinese equities right now for many reasons and fundamentals do not factor. We believe there is a bubble in real estate. We believe the communists are restricting the Internet and stealing secrets from our beloved companies. We believe more monetary policy moves will be enacted. We believe GDP numbers are inflated. We are afraid and might I add jealous. And at a time when we fear a market correction in the US markets, the thing that will be hit the hardest is emerging market small caps. We are seeing this play out before our eyes. Today was a critical day and we did not pass any test. Not even close. At this juncture, it is my feeling that it will be many weeks, not days, before we get this emotional tidal wave behind us and PPS loses will continue during this time. Earnings season will be the next chance we have next month, but it will require that our perception changes during that time and at minimum, the US markets begin to stabilize. American investors just don't want anything to do with China right now. We don't know what is around the corner.
Sorry for the sweeping generalizations, but that is exactly what characterizes the indiscriminate selling we are seeing.
