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The crash of China's red-hot stock market has been one of the biggest stories of the year. And market-watchers are worried about what the volatility could mean for China's consumers and businesses.
However, the freak-out may be overblown.
"The stock market wealth affect in China is smaller than most assume, as stocks represent less than 15% of household financial assets and equity issuance accounts for less than 5% of total social financing," writes HSBC Chief Economist for Great China, Qu Hongbin in July 7 note to clients.
It's worth adding that the China's stock market is a fraction of the size of the US stock market.
For most Chinese households, consumption is driven by income growth not fluctuations in their assets, according to Qu. And most people put the bulk of their wealth in cash and deposits rather than stocks.
This chart shows the allocation of household financial assets in China. By May 2015, stocks as a share of assets was around 13%, up slightly from just over 10% in 2014, according to estimates from HSBC.
"Although growing, the share is likely still below its own peak historical level and that of other markets. Therefore, the degree of household participation, which is the basis of a clear wealth effect, remains limited," writes Qu. "The recent rally was driven by an increase in leverage rather than a significant broadening of the investor base."
HSBC