Top 7 Events That Could Roil China Markets

China’s markets have made bigger headlines than usual over the past couple of weeks, some positive and some negative.

Some events have arisen out of the country’s slowing economy and other economic issues. But others have resulted from the government’s efforts to better regulate financial markets and bring them more in line with those in Europe and America.

In addition, China is trying to push its people away from an overleveraged exposure to real estate and into more exposure to equities, according to Guild Investment Management Inc. Currently, the firm said in research, 72% of the assets in mainland Chinese households are in real estate, while just 6% are in equities; in the U.S., both are around 25%.

As China strives to make its economy more consumer-driven and less dependent on manufacturing, according to Guild, providing incentives for people to turn to the stock market as a way to invest will allow “Chinese government banks and industrial companies … to sell shares to the public and improve their balance sheets.”

Here’s what investors should be looking at among the good and bad pressures on Chinese markets.

1. Kaisa defaults on dollar debt

Kaisa Group Holdings Ltd. garnered the dubious honor of being the first Chinese real estate company to default on dollar-denominated debt. It announced on April 21 that it failed to make two interest payments on $1 billion worth of U.S. dollar-denominated bonds.

The Chinese real estate market has been anything but calm, between feared bubbles, a slowing economy, and the Chinese government’s crackdown on corruption. That last may be what brought the company to its knees, since authorities last fall restricted the sale of many of Kaisa’s Shenzen properties.

While the government gave no reason for its actions, the company clammed up as well, letting both media and analyst questions go unanswered. The situation went downhill from there, as company executives resigned and investors were pressured to take less than what they were owed.

The company is looking at restructuring, but that doesn’t seem to have quenched broader market enthusiasm for property issue offerings—yet.

2. Tianwei defaults on bonds

In another questionable first for China, state-owned Baoding Tianwei Group Co., the unit of central government-owned China South Industries Group Corp., became the first government-owned firm to default on the country’s domestic bond market.

The power equipment manufacturer blamed its woes on poor performance in the renewable energy sector, where government calls to move to alternative sources of power conflicted with China’s economic slowdown.

The failure may signal a change in how China approaches the fate of government-owned companies, since previously the government had protected such firms amid financial floundering.

3. China exports fall by 15%

China’s economy is in trouble—a situation underscored by a shocking drop in March exports of 15%. Analysts had expected an increase of 12%. A stronger yuan ate away at sales to both the European Union and Japan and forced Chinese exporters’ costs higher.

Imports were down as well, according to the General Administration of Customs, which said that March figures were down 12.7% from March of last year. While the drop in imports was expected, the fall in exports was not.

Continued shrinking sales abroad could threaten jobs and impart further harm to the country’s already troubled economy, which could also result in political unrest—something the government has been at pains to avoid.