Of course, stock markets worldwide were overvalued for quite some time and speculators were using margin debt to buy shares. So is this long overdue correction surprising? Hardly. What is interesting is that the trigger for the change in sentiment was China.
Over the last year, the country has experienced the popping of a real estate bubble, a fierce economic slowdown, a stock market crash, and a surprise devaluation of the currency. Actually given this kind of record, it is surprising global markets haven’t reacted until recently, once China moved into correction territory (down more than 10 percent from its highs) during the week ending Aug. 21.
The Chinese stock market has erased all gains for the year 2015. Google Finance
