Morning from Copenhagen.

Bizarre move in Chinese risk assets this morning, with the Hang Seng dropping more than 3% from intraday highs within just 1–2 hours. The recent frenzy in Chinese tech has suddenly come to an abrupt halt.

This raises the question: is China heading straight back into the abyss, or is there still some merit to the China bull case? We are probably leaning toward the first.

The resilience in European assets is noteworthy, especially given their historical sensitivity to China’s performance. Yet, we’ve seen almost no reaction in European equities following the sharp Chinese move this morning.

Chart 1: China is back in the abyss most likely