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You can't ignore China

Apart from being the world's second biggest economy, the largest trading nation and accounting for 40 per cent of 2014 economic growth, what does China have to do with my portfolio?

7 September 2015

Ok, so it's not quite, 'What have the Romans ever done for us?' but hopefully you get the point.

China is one of the principal reasons why the FTSE 100 is around 6,200 right now, rather than 7,100 as it was just a few months ago. If you are invested in a FTSE tracker, then the main driver behind your recent investment performance is China's economy, and not the robust UK economy as you might expect.

In the FTSE 100, only around 20 per cent of earnings are made in the UK. Emerging markets are not far behind at 15 per cent of profits. Energy and materials make up around 20 per cent of the FTSE. As China slows and reduces infrastructure spending, it has less demand for commodities which adds pressure on world prices to drop.

The crash

Of course many of the headlines have been a...

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