Tuesday’s global stock market slump has wiped billions off equity values, leaving analysts groping for reasons to explain the sharp correction. The slide began in China with the Shanghai Composite losing more than 9% in value, that’s 80 billion euros.
Analysts blamed fears of an official crack-down on illegal investments. The news that China’s equities had fallen so sharply sent a shiver of dread through the rest of the financial world.
In Europe, 270 billion euros was wiped off the boards as the China slump prompted traders to sell. These sales generated falls were then exacerbated by computer-generated stop/loss orders, triggering still further declines. The result was mass selling in markets from London to Berlin, Paris to Madrid with all markets losing an average of three to four per cent.