The danger of a hard landing in China is the most underpriced risk in financial markets, according to a survey of more than 1,000 institutional investors by Barclays Capital.

Some 27 per cent of investors cited the risk of a sharp slowdown in Chinese economic growth as the biggest threat to markets, outstripping fears over political upheaval in the Middle East and North Africa, worries over sovereign debt and the risk of a spike in inflation. The survey was conducted prior to the devastating earthquake and tsunami in Japan.

“Events in the Middle East have been all over the press. The Chinese hard landing has received less attention and is less priced in,” said Piero Ghezzi, head of economics, emerging markets and FX research at Barclays Capital.