Major stock markets saw significant sell offs on the first week of 2016, with renewed concerns over China exacerbated by rising tensions in the Middle East, lower commodity prices, and a threat to geopolitical stability after North Korea conducted an unexpected nuclear test.
Chinese stocks were suspended from trade twice in just four days, after the CSI300 saw losses exceeding 7 percent on Monday and Thursday, which triggered the new circuit breakers - a market calming regulatory tool introduced at the start of the year, only to be scrapped off by the end of the week. By Friday, the erased its 2015 gains and fell by 9.97 percent for the week.
Barclays said in a note several factors were likely to have contributed to the sharp corrections in Chinese equity and foreign exchange markets.
They include the expiration of the share sale ban on major shareholders of listed companies, the introduction of the new circuit-breakers, subdued Purchasing Managers' Index (PMI) data, a measure of factory activities in the manufacturing and non-manufacturing sectors, and the devaluation of the yuan.
The volatility in Chinese markets spread beyond its borders and led to major indexes around the world registering significant losses for the week.
Stateside, the shed 6.1 percent, the S&P 500 lost 5.96 percent, and the was down 7 percent.
In London, the FTSE 100 was down 5.28 percent for the week.
In this week's Trader Poll, tell us if investors have jumped the gun and overdone the 2016 sell-off:
