Chinese equity markets are having a terrible year with the MSCI China Index being one of the worst-performing global benchmarks currently. With the effects of the ongoing regulatory crackdown season still in play as of today, the stock market received the equivalent of a body slam again, thanks to jitters over an impending debt default from China Evergrande Group — one of the largest property developers in the country.

When the slow but inexorable Evergrande crisis suddenly fell into the public eye recently, Chinese stocks saw yet another plunge, pushing them into their furthest divergence in performance from Emerging Market (EM) stocks in modern history (See Charts 1 and 2).

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