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Chinese stocks destroy $39.8B in U.S. wealth

USA TODAY logo USA TODAY 7/27/2015 Matt Krantz

The Chinese stock implosion is starting to get serious. It's costing U.S. investors real money.

The 144 China-based stocks with primary listings on major U.S. exchanges have erased nearly $40 billion in paper wealth since the Shanghai Composite index peaked on June 12. It's an enormous destruction of wealth that in effect wipes out the market value of a company the size of cruise ship operator Carnival.

The Shanghai composite index' losses are only getting worse. The much-watched measure of Chinese stocks fell 8.5% in overnight trading Monday. The index has dropped more than 27% since hitting its peak this year back on June 12.

Some of the stock-specific shredding of value is getting noteworthy. Chinese e-commerce stock, Alibaba, has been the biggest destroyer of U.S. investor wealth. The stock is only down 6.1% since June 12 - but given it's enormous market value, investors have lost $7.6 billion on the stock during the downturn. The company still has a market value of $208.6 billion.

Also making U.S. investors feel the pain is, another online retailer based in China. This stock is down 15% since the Shanghai's peak - which given the company's large size - is handing investors a $4.5 billion paper loss.

Watching Chinese stocks go from a point of riches - to a point of pain - is quite the reversal for U.S. investors. The Vanguard Emerging Markets exchange-traded fund, which owns stakes in Chinese stocks, soared in late 2007 as it looked like the emerging nations were where the growth would be.

Once again - the crowd is wrong. And the stampede out proves to be painful.

But don't think if you didn't own any of these Chinese stocks directly that you're safe from the Chinese stock meltdown. Investors over the years have accumulated exposure to China through China-focused exchange-traded funds as well as emerging markets ETFs. The pain in China is spreading into these corners of the market - which financial advisors tell most investors to have at least some exposure to.



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