Shenzhen, China-based broker-dealer, Fox Capital Partners has told institutional clients that falling oil prices and worries over China’s economy are not the cause of the high volatility that has dogged global equity markets so far in 2016.

In the firm’s first research note of the year, Gordon Li-Chao, chief economist at Fox Capital Partners explains that the Fed rate hike in December is responsible for the wave of selling that has characterized markets from China to Europe and the US.

“The China slowdown/oil price storyline continues to be rolled out by the mainstream media but they’re all ignoring the 800lb gorilla in the room. The US Federal Reserve has raised interest rates for the first time in a decade, pricked the bubble and now the air is escaping; it really is as simple as that,” explained Li-Chao. “With worsening economic data coming out of the US, weaker corporate earnings and very little to cheer about over in Europe, there’s very little in the way of a safety net under stocks right now. We could potentially see more than 20% wiped off the value of the Dow and the S&P500.”

Oil has started the year ignominiously with prices dipping below $30 a barrel on several occasions as oversupply concerns and an imminent return to the market for post-lifted sanctions Iran has weighed heavily on sentiment.

“Add in continuing anemic growth in Europe and more concerns over China’s economy and Fox Capital Partners thinks we have the makings of a very challenging year in equities,” said Li-Chao.

About Fox Capital Partners
Fox Capital Partners is a successful, independent investment management practice established in Shenzhen City, China and headquartered in Shenzhen. Our highly-qualified professionals advise on a wide array of wealth accrual, preservation and portfolio management solutions aimed at affluent individuals and families in Asia and elsewhere.