Market uncertainty produces ongoing volatility in August
The summer stock swoon continued in August as investors were spooked by the Chinese government’s surprise devaluation of the yuan, the prospects of the global economy slowing further and, as a result, uncertainty over the US Federal Reserve’s interest rate intentions. The result was a US$5 trillion valuation decline in global stocks and the biggest two-month drop for Chinese stocks since 2008. Real estate (whether developers or REITs) was not immune to the sell-off, with a decline of 6.8 percent and 9.3 percent for global and Asia Pacific real estate stocks, respectively, during the month. The two-month drop has now erased any gains within the real estate sector for the year, with the region down 8.5 percent year-to-date and all the region’s major countries in negative-return territory (based on SNL Financial data, with quoted returns in local currency).
On a country basis — as would be expected given concerns over the Chinese economy — the regional decline was led