|Sydney Town Hall|
It is still early days, but there have been worrying developments with one large scale default and reports that the market is turning to credit-default swaps and mergers to reduce risk. Despite earlier predictions, China's financial policy seems firmly set against the state bailing out defaulting high risk enterprises (as opposed to bonds issued by local government authorities).
It is hard to gauge the level of Australian risk - those at direct risk from the recent default are reportedly domestic Chinese investors. Still, a prudent investor would probably use the opportunity to have another look at exposures to Chinese investments - that promise of a 10% pa return may turn out to be too good to be true.
Of course, if the Chinese economy goes awry, we might expect all sorts of other consequences.
More detailed advice around the issue is likely to become available shortly - I will post links if it eventuates.