Will China’s stock market slump impact B.C.?

WATCH: Stock markets around the world fell after a slide on the Shanghai stock exchange. Will there be a negative impact here in B.C.?

The Shanghai share index posted its biggest one-day plunge since February 2007, sinking 8.5 per cent Monday. That comes on top of a month-long meltdown that’s seen trillions of dollars of sell-offs.

With B.C.’s economy so tightly tied to Asia, some are wondering if the effect will be felt in this province and across Canada.

China’s economy has been slowing. Normally, when an economy is down, equity markets drop too, but not in China where the government intervened in an effort to stem a sell-off. The market experienced a bit of a comeback earlier this month, but today’s sell-off was in part triggered by more bad economic news. And that raises the question about what impact all this will have on B.C. and its close trade relations with China.

Helmut Pastrick, Chief Economist for Central 1 Credit Union, said the impact on B.C. “will be fairly minor,” saying the Chinese equity market is “quite substantial, but really it’s still fairly unsophisticated and undeveloped.”

In Vancouver, where real estate is an obsession, some wonder where Chinese investors will park their money given recent stock market volatility.

Tsur Somerville, director for the Centre for Urban Economics and Real Estate at UBC, thinks the dip in Chinese equities will not have much of an impact on local real estate.

“I do not for a second understand why people are making the connection between a run-up and then drop in small- and medium-cap stocks on the Shanghai stock exchange and what’s happening here,” he said.

The dip in Chinese markets did impact Canadian equities with the Toronto Stock Exchange registering a triple-digit loss Monday.

Brian Belski, chief investment strategist at BMO Capital Markets, says the reaction in Canada to the plunge in China demonstrates a broader issue – the degree to which investors around the world are depending on China as a growth engine.

“I think the problem with China is so many investors have put a lot of eggs in that one basket–needing China, really depending on China for growth and China for returns and China for overall appreciation,” said Belski.

-With files from Ted Chernecki and Canadian Press