Is China also causing a decline in US stocks?

Last Updated: 15. Februar 2024By

In my post yesterday, I showed you that the DAX usually follows the same direction as the Chinese stock exchanges. This makes sense, as many DAX companies generate a large part of their revenue in China.

You can find out which companies these are in detail in issue no. 4/2024 of my stock market service Voigts Global Profits.

Are the US stock exchanges at risk from the China crash? But now the question arises, what about US stocks? Could the US stock exchanges also be dragged down by a China crash?

Here, I do not see even remotely the same level of danger as in Germany. China is only the third most important trading partner of the US, behind Canada and Mexico.

However, we do see many imports from China and significantly less exports to China. This means that the sales opportunities of US companies would only be minimally affected by a downturn in China (unlike in Germany). The only potential risk would be the delivery of (pre-)products from China if individual suppliers were forced to declare bankruptcy. But this is likely to be the exception.

I also do not see any statistically significant correlation between the performance of the Shanghai and New York stock exchanges.

However, it is possible that the Chinese stock exchanges could be used as an explanation for a (manageable) correction on Wall Street, which would likely happen regardless.

There is always a (perceived) reason for a correction. In such cases, the mainstream media always likes to present a reason. This time it could be China. But don’t worry: It will not pose a serious threat to the upswing on the US stock exchanges.

This is also clearly shown by the performance so far this year. The US benchmark index is trading at or near all-time highs, while the DAX seems to be capped (the calm before the storm?) – and the Chinese stock exchanges have already taken a beating.

But the Chinese government is currently pulling a supposed ace out of its sleeve. What it is and what consequences it has, you will find out in my post tomorrow.