"Black Monday": The causes and consequences of China's market crash

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"Black Monday"

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China is sneezing. Will the world catch a cold?

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IT BEGAN innocently enough, with a fall in markets in China that might, at the outset at least, have been mistaken for the healthy clearing of froth from the world's frothiest stockmarket. Yet the plunge that started in Asia (and which followed a nasty drop in American markets on Friday) has continued to gather momentum. It now looks very worrying indeed. When markets in Shanghai closed on Monday, stocks were down 8.5%—the Shanghai Composite’s worst single-day fall in eight years and, given the daily limits on how far individual stocks can fall, very nearly the biggest possible decline. The People's Daily, the Communist party's mouthpiece, declared the day "Black Monday". The nervousness has radiated outward from China. The Nikkei index in Japan slipped by 4.6%. European bourses are down 4-5%. The Dow opened down more than 1,000 points; stocks have since regained some ground but the main indices …
Source: The Economy