Billions wiped off value of shares in global crash as markets ‘gripped by panic’

Shares plunged across the globe on Monday as dealers were gripped with panic over the faltering Chinese economy. Many slipped to their lowest levels in several years, while oil prices also tumbled to a six-year low at under $40 a barrel. The Shanghai composite index closed 8.5% down, Hong Kong’s Hang Seng index ended 5.2% down, while Manilla took a mauling as the Philippines’ main stock market plunged 6.7%. Stock markets in London, Paris and Frankfurt followed suit, opening sharply lower. The FTSE 100 index was down by 2.5% in early trade, briefly dipping below 6,000 for the first time since 2013, while major markets in France and Germany also opened down by more than 3%. Takako Masai, the head of research at Shinsei Bank in Tokyo, said: “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.”

The market is in a downtrend. There’s no good news, stocks are still expensive, and there’s no fresh money coming in.

Analyst Qi Yifeng

The sell-off continued despite China’s latest attempts to reassure investors. At the weekend, Beijing said it planned to let its main state pension fund invest in the stock market. But even before the Chinese markets opened, stocks in Asia took a beating after fears of a China-led global economic slowdown drove US stocks to their steepest one-day drop in nearly four years on Friday. The FTSE 100 endured its worst week of trading of 2015, losing 5.5% by Friday. It meant that £93bn was wiped from the value of the index. Analysts have called the falls a “necessary adjustment” and a “reality check”, while some experts said they were not just down to China’s economic slowdown. Sean Darby, chief global equity strategist at Jeffries, said: “A mix of disinflation and deflation forces, a tightening in global monetary conditions and deteriorating profits in emerging markets are much greater factors.”

Globally we see a massive panic and exit of capital out of emerging markets …. [they] are dropping like a stone

Bernd Berg, director at Societe Generale

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