China's stock market collapse sent shockwaves from Asia to Wall Street yesterday. The wealth management industry is advising investors to wait for the dust to settle before entering the fray.

Wealth managers across the globe told investors to hold off for more clarity after Chinese equity markets lost almost 9 per cent yesterday, marking what the country's official state news agency, China Xinhua News, declared “Black Monday”.

China's benchmark index, the Shanghai composite, fell 8.5 per cent yesterday – its worst daily sell-off in eight years. Since the People's Bank of China decided to devalue its renminbi currency on August 11, the index is down 18.5 per cent and Asian equities have lost almost 9 per cent.

The latest slide in Chinese equities, which was quickly dubbed “the great fall of China”, saw panic-selling spread across the US and Europe, where stocks all opened in the red on Monday morning. Britain's benchmark index, the FTSE 100, fell 3.5 per cent, wiping £56 billion ($88 billion) off the value of Britain's biggest listed companies. Meanwhile, US authorities suspended futures trading in the S&P and Nasdaq after their respective pre-trading limits were hit. The Dow Jones plummeted 1,000 points or 3 per cent on opening.

Julius Baer's head of equity strategy research, Christoph Riniker, said price declines in Europe and the US do not necessarily represent buying opportunities, and that investors should wait for a clearer picture.

“Taking a longer-term view shows that more negative is still possible. It is therefore too early to say that we already see buying opportunities on current levels,” Riniker said.

“As long as we do not know how the Chinese government will react in regard to their domestic growth we would rather stay at the sidelines. However, the longer-term fundamental assessment as outlined in various publications still points to better market conditions going forward. The only problem we currently have is the unknown time span between today [Monday] and when fundamentals become more pivotal again.”

Commodity prices continued to tumble, triggering a sell-off in oil and driving Russia's rouble to an all-time low against the dollar. Bloomberg's commodity index of 22 raw materials plunged to its lowest level in 16 years.

With the outlook for emerging markets understandably dampened by the prospect of a rate hike from the US Federal Reserve and a continued slump in commodity prices, Royal London Asset Management referred to the global equity rout as one of the strongest contrarian buying opportunities yet.

We remain cautious on Asia ex-Japan and emerging market equities as we are not optimistic about Chinese growth but it is hard to see how lower commodity prices and less hawkish monetary policy are a negative for the US consumer or the US stock market. We remain positive on equities and we are buying the dip on Wall Street,” said Trevor Greetham, head of multi-asset at Royal London Asset Management.

“We see great similarities with the Asia crisis of the 1990s with the US generally on a path to monetary tightening but with Asia slowing, this time led by China not Japan. There were many shocks along the way over that decade as emerging market equities and commodities bore the brunt of the deflationary forces but US equities returned 400 per cent over the period as a whole,” he continued.

The violence of the equity sell-off has prompted the question: Was the Chinese devaluation a Lehman moment? The devaluation has already led to knock-on currency devaluations in emerging markets where policymakers look to keep their exports competitive, sparking deflationary fears shock and talks of a currency war. While China’s importance as the world's second largest economy should not be underestimated, its deceleration does not spell doom for Europe, according to Dean Tenerelli of T Rowe Price, and the European portion of earnings within European companies should provide some comfort.

“We do not believe we are at the forefront of a new Asian financial crisis. Our view is that China is in the middle of a long process to open up its economy and reform its financial system. As part of this process, China will need to have a truly exchangeable currency. The country has experienced a significant real appreciation of its currency for many years under the US dollar peg and has been suffering with the strong dollar. On most FX models, China does actually come out as having an overvalued currency,” added Jorry Nøddekær of Nordea.

Rashmi Sadhwani, an investment strategist at Coutts, said the UK wealth manager remains in the overweight camp for Asia ex-Japan equities amid all the panic.

“The sell-off we are seeing in Chinese assets is again more a crisis of confidence rather than a change to fundamentals. Chinese authorities will continue to provide support to the market when needed, as witnessed by their action over the weekend to allow its pension fund to invest in the local stock market for the first time,” Sadhwani said.