After three weeks of relative calm Chinese shares went into free fall on Monday.
The major indexes tumbled by more than eight percent, the largest one-day fall since 2007.
Earlier in July the government in Beijing launched a raft of measures aimed at reversing a slump that had started in mid-June.
“Although we previously saw the Central Bank taking measures to steady the market, the popular sentiment has not been steadied at all. After today’s large drop people may well be reminded of the recent crash. After all the previous crash was tragic and is still very fresh in people’s minds. So, in the short term popular feeling may cause wide fluctuations in the market.”
World markets nervous
And the rest of the world is watching closely. China’s volatility and apparent inability of the government to bring stability to the markets is stoking fears about the broader health of the the world’s second largest economy.
“China is hugely important for the world economy. If things continue like this the Central Bank will start to buy shares in Chinese companies. China can’t be allowed to weaken, otherwise the entire world economy will have a problem and Greece will look like a children’s birthday party in comparison.”
The markets in China had recovered by around 15 percent from their slump in early July, but those gains are now being all but wiped out.
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