Riskology: Did markets overreact to China sell-offs?

Analysis shows markets can be overly sensitive to single-factor events

damian-handzy-investor-analytics-hfr0915

As international markets gyrated over the past several months it seemed to us that participants possibly adopted a “hair-trigger” or reactionary approach and thereby exaggerated both the impact and contagion of what would otherwise have been localised market events. Specifically, we wanted to examine if markets overreact to single-factor events by evaluating if stocks are oversold relative to single-factor exposure. China’s dramatic and unprecedented June and August sell-offs are good candidates

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