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Shanghai Composite Index has slid more than 16pc this year to be among world’s worst performers

CHINA just lost its ranking as the world’s number two stock market. After a Thursday slump, Chinese equities were worth US$6.09 trillion (RM24.85 trillion), according to data compiled by Bloomberg. That compares with US$6.17 trillion in Japan.

The United States has the world’s largest stock market at just over US$31 trillion.

China’s stock market overtook Japan’s in late 2014, then soared to an all-time high of more than US$10 trillion in June 2015.

Chinese equities and the nation’s currency have taken a beating this year amid a trade spat with the US, a government-led campaign to cut debt and a slowing economy.

“Losing the ranking to Japan is the damage caused by the trade war,” said Banny Lam, head of research at CEB International Investment Corp in Hong Kong.

“The Japan equity gauge is relatively more stable around the current level, but China’s market cap has slumped from its peak this year.”

The Shanghai Composite Index has lost more than 16 per cent this year to be among the world’s worst performers.

Industrial and tech stocks have been among China’s worst performers, with those sub-gauges on the CSI 300 Index of large caps sliding more than 20 per cent this year.

Still, the Shanghai Composite Index is headed for its worst week in more than a month.

“The market will likely continue to hover at low levels for the next couple of months,” said Linus Yip, Hong Kong-based strategist with First Shanghai Securities Ltd.

“But there’s still a chance that China’s stock market will recover with total capitalisation ascending to the world’s No. 2 place again.

“After all, the economic fundamentals are still stable and growth momentum will resume after a short-term downturn.”

Losing the number two spot is a reminder that China’s role in global financial markets – while large – still doesn’t match its economic might.