Wall Street’s Big Bet on Chinese Markets is going all Wrong

The bar for China’s financial markets to do better this year was so low, virtually everyone on Wall Street was saying the country’s stocks and bonds could only go up.

That bet isn’t going so well. Mainland equities just entered their first bear market since Donald Trump’s trade war. Shares in Hong Kong had their worst week in five months, with short sellers feasting like never before. Credit-market contagion is spreading to some of the strongest property developers for the first time. Assets that were previously resilient, like the yuan and government bonds, are no longer immune.