China small caps stocks plunged -4.3% on Monday on Gray Rhino fears after the State controlled paper published a story on the fear of gray rhinos. The State controlled paper wrote (open in Google Chrome then use the Translate option):
Both against the “black swan”, but also against “gray rhinos”, and all kinds of risk signals that can not be taken lightly, we can not turn a deaf ear.
The big fear is that the Chinese government is preparing a big crackdown on riskier Chinese assets. The logic by traders is if the government cracks down on the use of debt and leverage a lot of Chinese small cap stocks are going to crash.
China’s small-cap Shenzhen index plunged -4.3% on Monday. The ChiNext, which focuses on high-tech companies, plunged -5.1%.