China stock market has plunged for a second day after worries over the country’s slowing growth triggered a global sell-off.
The Shanghai Composite, China’s main stock exchange, fell 7.6% on August 25 – after losing 8.5% on what state media have called China’s “Black Monday” on August 24.
It was the worst fall since 2007 and caused sharp drops in markets in the US and Europe.
Tokyo’s Nikkei index had a volatile day, closing 4% lower.
The Shanghai index ended the day 245 points lower at 2,964.97.
After decades of rapid growth, China is slowing down, and investors globally are worried that firms and countries which rely on high demand from China – the world’s second largest economy and the second largest importer of both goods and commercial services – will be affected.
Chinese shares had experienced a year-long rally – mainly fuelled by investors borrowing money to buy shares – which came to an end in June.
The government then intervened in financial markets, to try to maintain momentum in the economy.
Two weeks ago China’s central bank devalued the currency, the yuan – this raised fresh concerns that China’s economy could be in worse shape than previously thought.
A cheaper currency lowers the price of China’s exports, making them more attractive to global companies.
Elsewhere in Asia and Australia on August 25, markets beat expectations, opening lower but then returning back to positive territory: Korea’s KOSPI gained almost 1% and Australia’s S&P ASX/200 ended the day 2.7% higher.
The dollar remained weak at 119.15 yen, up from a seven month low of 118.51 yen in New York on August 24.
Commodity prices also recovered after Monday’s falls, although oil remains under pressure because of a global oversupply.
Overnight, the Europe and the US saw dramatic falls, but are expected to show some signs of recovery when they open on August 25.
Wall Street’s Dow Jones fell 6%, but then almost recovered its losses before closing 3.6% lower.
London’s FTSE 100 index closed down 4.6% as major markets in France and Germany were down by 5.5% and 4.96% respectively.
