Markets throughout Asia collapsed on Monday amid concerns over China's slowdown, prompting comparisons with the region's financial crisis in the early 1990s.
The Shanghai Composite closed 8.49 per cent down, wiping out all 2015 gains so far and marking the largest drop since 2007. Taiwan’s Taiex closed down 4.8 per cent, though during trading it dropped as low as 7.2 per cent - the biggest fall since 1990. Hong Kong’s Hang Seng index closed 5.2 per cent down and Japan's Nikkei closed 4.6 per cent down.
"Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable," Takako Masai, head of research at Shinsei Bank in Tokyo told Reuters.
Biggest drop since 1990!— Patrick McGee (@PatrickMcGee_) August 24, 2015
Taiwan's Taiex down 7.2%
Taiwan stock market had its biggest plunge in 25 years.— Eddy Elfenbein (@EddyElfenbein) August 24, 2015
Sure I remember 2015. That's when the global financial crisis started in Kazakhstan.— Eddy Elfenbein (@EddyElfenbein) August 24, 2015
The slump comes as Chinese authorities announced measures to help boost the stock market, including allowing state pension funds to invest in shares. Local governments will now be able to invest up to 30 per cent of their pension funds into shares listed on Chinese stock markets. Earlier this month the Chinese central bank devalued the yuan to help boost exports.
The Chinese economy has grown by just seven per cent over the second quarter of 2015, slower than any time during the financial crisis.
On Friday the Shanghai Composite closed four per cent down, following more disappointing manufacturing data. Over the past week, China’s Shanghai Composite has fallen 12 per cent.
On Friday, American stock markets closed in the red over global growth concerns. The Dow and S&P 500 closed 3.12 and 3.19 per cent down respectively. This morning futures were heading south.
The contagion spread to European markets, which opened down across the board. The FTSE 100 opened 2.9 lower at 6,014 points, the Cac was down the same level, dropping to 4,495 and the Dax 3.3 per cent lower at 9,794 points.
The Dubai stock market meanwhile opened 5.6 per cent down.