Avoid the Madness of Crowds

China’s “Black Monday”—which ignited a global sell-off costing investors trillions of dollars—was the result of this decade’s single greatest China market misread. But rather than contagion, our clients saw a rare opportunity.


Following a summer of mostly bad news, the Shanghai Composite Index crashed in late August 2015, igniting a panic that soon spread globally. Within weeks China’s “Black Monday” had wiped out over $5 trillion of value from global stock markets.

Market Consensus

During the summer of 2015 investors grew increasingly panicked about the state of the Chinese economy. Within just a ten-week period China’s stock market crashed, manufacturing gauges hit a multi-year low, and Beijing appeared to announce a currency devaluation. By late August, world markets plummeted, interpreting these events as a signal that China’s economy could be on the verge of collapse.

The crisis of August 2015 would prove to be perhaps the single greatest China market misread this decade. But why did investors get it so wrong? Quite simply, because they lacked visibility into what was actually happening on the ground. Forced to extrapolate a larger picture of China’s prospects from these anecdotal snapshots of weakness, most investors saw little choice but to head for the exits.

CBB Prediction

From the outset, our advice to clients was crystal clear: “Current market perceptions of China may be more thoroughly divorced from facts on the ground than at any time in the past five years.” China Beige Book’s real-time data showed that areas of weakness did exist, but that overall economic results had hardly changed from the previous quarter’s mild slowdown.

Within two months, the panic had subsided and markets had largely rebounded. For too many investors, this was a major opportunity lost.


For ten days before going public with our results, our team worked exhaustively with clients to ensure they were insulated from the fall-out, and making decisions based on hard data—not innuendo. The result: they avoided panic selling and emerged in September as opportune buyers, particularly in the U.S. market which had just seen its biggest sell-off in four years.

CBB Media Releases Concurrent with Event

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