Stock market crash

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A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes [1] are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.

Stock financial instrument

The stock of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are commonly known as "stocks". A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued for example without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.

Stock market public entity for the trading of company stocks and shares

A stock market, equity market or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately. Examples of the latter include shares of private companies which are sold to investors through equity crowdfunding platforms. Stock exchanges list shares of common equity as well as other security types, e.g. corporate bonds and convertible bonds.

Paper wealth means wealth as measured by monetary value, as reflected in the price of assets – how much money one's assets could be sold for. Paper wealth is contrasted with real wealth, which refers to one's actual physical assets.


Stock market crashes are social phenomena where external economic events combine with crowd behavior and psychology in a positive feedback loop where selling by some market participants drives more market participants to sell. Generally speaking, crashes usually occur under the following conditions: [1] a prolonged period of rising stock prices and excessive economic optimism, a market where P/E ratios (Price-Earning ratio) exceed long-term averages, and extensive use of margin debt and leverage by market participants. Other aspects such as wars, large-corporation hacks, changes in federal laws and regulations, and natural disasters of highly economically productive areas may also influence a significant decline in the stock market value of a wide range of stocks. All such stock drops may result in the rise of stock prices for corporations competing against the affected corporations.

Social phenomena include all behavior that influences or is influenced by organisms sufficiently alive to respond to one another.

An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents. Understood in its broadest sense, 'The economy is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources'. Economic agents can be individuals, businesses, organizations, or governments. Economic transactions occur when two parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. However, monetary transactions only account for a small part of the economic domain.

Crowd psychology

Crowd psychology, also known as mob psychology, is a branch of social psychology. Social psychologists have developed several theories for explaining the ways in which the psychology of a crowd differs from and interacts with that of the individuals within it. Major theorists in crowd psychology include Gustave Le Bon, Gabriel Tarde, Sigmund Freud, and Steve Reicher. This field relates to the behaviors and thought processes of both the individual crowd members and the crowd as an entity. Crowd behavior is heavily influenced by the loss of responsibility of the individual and the impression of universality of behavior, both of which increase with crowd size.

There is no numerically specific definition of a stock market crash but the term commonly applies to steep double-digit percentage losses in a stock market index over a period of several days. Crashes are often distinguished from bear markets by panic selling and abrupt, dramatic price declines. Bear markets are periods of declining stock market prices that are measured in months or years. Crashes are often associated with bear markets, however, they do not necessarily go hand in hand. The crash of 1987, for example, did not lead to a bear market. Likewise, the Japanese bear market of the 1990s occurred over several years without any notable crashes.

Stock market index method of measuring the value of a section of the stock market

A stock index or stock market index is a measurement of a section of the stock market. It is computed from the prices of selected stocks. It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.

Panic selling

Panic selling is a wide-scale selling of an investment which causes a sharp decline in prices. Specifically, an investor wants to get out of an investment with little regard of the price obtained. The selling activity is problematic because the investor is selling in reaction to emotion and fear, rather than evaluating the fundamentals. Most major stock exchanges use trading curbs to throttle panic selling, providing a cooling period for people to digest information related to the selling and restore some degree of normalcy to the market.

Black Monday (1987) world stock market crash of Monday, October 19, 1987

In finance, Black Monday refers to Monday, October 19, 1987, when stock markets around the world crashed. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already sustained significant declines. The Dow Jones Industrial Average (DJIA) fell exactly 508 points to 1,738.74 (22.61%). In Australia and New Zealand, the 1987 crash is also referred to as "Black Tuesday" because of the time zone difference.


Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC). In Robert Shiller's words, the VOC was "the first real important stock" in the history of finance. The VOC was possibly in fact the first ever blue-chip stock. Vereenigde Oostindische Compagnie spiegelretourschip Amsterdam replica.jpg
Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC). In Robert Shiller's words, the VOC was "the first real important stock" in the history of finance. The VOC was possibly in fact the first ever blue-chip stock.
Courtyard of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first formal stock exchange. It was in the 17th-century Dutch Republic that the fundamental elements of a formal stock market (as we know it today) were 'invented'. Emanuel de Witte - De binnenplaats van de beurs te Amsterdam.jpg
Courtyard of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first formal stock exchange. It was in the 17th-century Dutch Republic that the fundamental elements of a formal stock market (as we know it today) were 'invented'.

Tulip Mania (in the mid-1630s) is often considered to be the first recorded speculative bubble. Historically, early stock market bubbles and crashes have also their roots in socio-politico-economic activities of the 17th-century Dutch Republic (the birthplace of the world's first formal stock exchange and market), [3] [4] [5] [6] [7] the Dutch East India Company (the world's first formally listed public company), and the Dutch West India Company (WIC/GWIC) in particular. As Stringham & Curott (2015) remarked, "Business ventures with multiple shareholders became popular with commenda contracts in medieval Italy (Greif, 2006, p. 286), and Malmendier (2009) provides evidence that shareholder companies date back to ancient Rome. Yet the title of the world's first stock market deservedly goes to that of seventeenth-century Amsterdam, where an active secondary market in company shares emerged. The two major companies were the Dutch East India Company and the Dutch West India Company, founded in 1602 and 1621. Other companies existed, but they were not as large and constituted a small portion of the stock market (Israel [1989] 1991, 109–112; Dehing and 't Hart 1997, 54; de la Vega [1688] 1996, 173)." [8]

Stock market bubble

A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation.

Stock exchange organization that provides services for stock brokers and traders to trade securities

A stock exchange, securities exchange or bourse, is a facility where stock brokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments. Stock exchanges may also provide for facilities the issue and redemption of such securities and instruments and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds. Stock exchanges often function as "continuous auction" markets with buyers and sellers consummating transactions via open outcry at a central location such as the floor of the exchange or by using an electronic trading platform.

The Dutch East India Company was an early megacorporation founded by a government-directed amalgamation of several rival Dutch trading companies (voorcompagnieën) in the early 17th century. It was established on March 20, 1602 as a chartered company to trade with India and Indianised Southeast Asian countries when the Dutch government granted it a 21-year monopoly on the Dutch spice trade. It has been often labelled a trading company or sometimes a shipping company. However, VOC was in fact a proto-conglomerate company, diversifying into multiple commercial and industrial activities such as international trade, shipbuilding, and both production and trade of East Indian spices, Formosan sugarcane, and South African wine.. The Company was a transcontinental employer and an early pioneer of outward foreign direct investment. The Company's investment projects helped raise the commercial and industrial potential of many underdeveloped or undeveloped regions of the world in the early modern period. In the early 1600s, by widely issuing bonds and shares of stock to the general public, VOC became the world's first formally-listed public company. In other words, it was the first corporation to be listed on an official stock exchange. It was influential in the rise of corporate-led globalisation in the early modern period.

Mathematical theory

The mathematical description of stock market movements has been a subject of intense interest. The conventional assumption has been that stock markets behave according to a random log-normal distribution. [9] Among others, mathematician Benoît Mandelbrot suggested as early as 1963 that the statistics prove this assumption incorrect. [10] Mandelbrot observed that large movements in prices (i.e. crashes) are much more common than would be predicted from a log-normal distribution. Mandelbrot and others suggested that the nature of market moves is generally much better explained using non-linear analysis and concepts of chaos theory. [11] This has been expressed in non-mathematical terms by George Soros in his discussions of what he calls reflexivity of markets and their non-linear movement. [12] George Soros said in late October 1987, 'Mr. Robert Prechter's reversal proved to be the crack that started the avalanche'. [13] [14]

Log-normal distribution probability distribution

In probability theory, a log-normal distribution is a continuous probability distribution of a random variable whose logarithm is normally distributed. Thus, if the random variable X is log-normally distributed, then Y = ln(X) has a normal distribution. Likewise, if Y has a normal distribution, then the exponential function of Y, X = exp(Y), has a log-normal distribution. A random variable which is log-normally distributed takes only positive real values. The distribution is occasionally referred to as the Galton distribution or Galton's distribution, after Francis Galton. The log-normal distribution also has been associated with other names, such as McAlister, Gibrat and Cobb–Douglas.

Chaos theory field of mathematics about dynamical systems highly sensitive to initial conditions

Chaos theory is a branch of mathematics focusing on the behavior of dynamical systems that are highly sensitive to initial conditions. "Chaos" is an interdisciplinary theory stating that within the apparent randomness of chaotic complex systems, there are underlying patterns, constant feedback loops, repetition, self-similarity, fractals, self-organization, and reliance on programming at the initial point known as sensitive dependence on initial conditions. The butterfly effect describes how a small change in one state of a deterministic nonlinear system can result in large differences in a later state, e.g. a butterfly flapping its wings in Brazil can cause a hurricane in Texas.

George Soros Hungarian-American business magnate, investor and philanthropist

George Soros, Hon is a Hungarian-American investor and philanthropist. As of February 2018, he had a net worth of $8 billion, having donated more than $32 billion to his philanthropic agency, Open Society Foundations.

Research at the Massachusetts Institute of Technology suggests that there is evidence the frequency of stock market crashes follows an inverse cubic power law. [15] This and other studies such as Prof. Didier Sornette's work suggest that stock market crashes are a sign of self-organized criticality in financial markets. [16] In 1963, Mandelbrot proposed that instead of following a strict random walk, stock price variations executed a Lévy flight. [17] A Lévy flight is a random walk that is occasionally disrupted by large movements. In 1995, Rosario Mantegna and Gene Stanley analyzed a million records of the S&P 500 market index, calculating the returns over a five-year period. [18] Researchers continue to study this theory, particularly using computer simulation of crowd behaviour, and the applicability of models to reproduce crash-like phenomena.

Massachusetts Institute of Technology University in Massachusetts

The Massachusetts Institute of Technology (MIT) is a private research university in Cambridge, Massachusetts. Founded in 1861 in response to the increasing industrialization of the United States, MIT adopted a European polytechnic university model and stressed laboratory instruction in applied science and engineering. The Institute is a land-grant, sea-grant, and space-grant university, with a campus that extends more than a mile alongside the Charles River.

Power law mathematical relationship between two quantities

In statistics, a power law is a functional relationship between two quantities, where a relative change in one quantity results in a proportional relative change in the other quantity, independent of the initial size of those quantities: one quantity varies as a power of another. For instance, considering the area of a square in terms of the length of its side, if the length is doubled, the area is multiplied by a factor of four.

Didier Sornette French scientist

Didier Sornette has been Professor on the Chair of Entrepreneurial Risks at the Swiss Federal Institute of Technology Zurich since March 2006. He is also a professor of the Swiss Finance Institute, and a professor associated with both the department of Physics and the department of Earth Sciences at ETH Zurich. He was previously jointly a Professor of Geophysics at UCLA, Los Angeles California (1996–2006) and a Research Professor at the French National Centre for Scientific Research (1981–2006), working on the theory and prediction of complex systems. Pioneer in econophysics, in 1994, he co-founded with Jean-Philippe Bouchaud the company Science et Finance, which later merged with Capital Fund Management (CFM) in 2000. He left however Science et Finance in 1997 to focus on his shared position as Research Professor at the CNRS in France (1990-2006) and Professor at UCLA (1996-2006).

Research at the New England Complex Systems Institute has found warning signs of crashes using new statistical analysis tools of complexity theory. This work suggests that the panics that lead to crashes come from increased mimicry in the market. A dramatic increase in market mimicry occurred during the whole year before each market crash of the past 25 years, including the recent financial crisis. When investors closely follow each other's cues, it is easier for panic to take hold and affect the market. This work is a mathematical demonstration of a significant advance warning sign of impending market crashes. [19] [20]

A recent phenomenon, known as the RR Reversal, has also been well documented in recent years – where a rapidly increasing stock experiences an inexplicable and sudden pullback to the magnitude of 10 – 40%[ clarification needed ] within a month. [ citation needed ]

Major crashes in the United States

Panic of 1907

In 1907 and in 1908, the NYSE fell by nearly 50% due to a variety of factors, led by the manipulation of copper stocks by the Knickerbocker company. [21] Shares of United Copper rose gradually up to October, and thereafter crashed, leading to panic. [22] [23] A number of investment trusts and banks that had invested their money in the stock market fell and started to close down. Further bank runs were prevented due to the intervention of J.P.Morgan. [24] The panic continued to 1908 finally and led to the formation of the Federal reserve in 1913. [25]

Wall Street Crash of 1929

Crowd gathering on Wall Street the day after the 1929 crash. Crowd outside nyse.jpg
Crowd gathering on Wall Street the day after the 1929 crash.

The economy had been growing for most of the Roaring Twenties. It was a technological golden age, as innovations such as the radio, automobile, aviation, telephone, and the power grid were deployed and adopted. Companies that had pioneered these advances, like Radio Corporation of America (RCA) and General Motors, saw their stocks soar. Financial corporations also did well, as Wall Street bankers floated mutual fund companies (then known as investment trusts) like the Goldman Sachs Trading Corporation. Investors were infatuated with the returns available in the stock market, especially by the use of leverage through margin debt.

On August 24, 1921, the Dow Jones Industrial Average stood at a value of 63.9. By September 3, 1929, it had risen more than sixfold, touching 381.2. It would not regain this level for another 25 years. By the summer of 1929, it was clear that the economy was contracting, and the stock market went through a series of unsettling price declines. These declines fed investor anxiety, and events came to a head on October 24, 28, and 29 (known respectively as Black Thursday, Black Monday, and Black Tuesday).

On Black Monday, the Dow Jones Industrial Average fell 38.33 points to 260, a drop of 12.8%. The deluge of selling overwhelmed the ticker tape system that normally gave investors the current prices of their shares. Telephone lines and telegraphs were clogged and were unable to cope. This information vacuum only led to more fear and panic. The technology of the New Era, previously much celebrated by investors, now served to deepen their suffering.

The following day, Black Tuesday, was a day of chaos. Forced to liquidate their stocks because of margin calls, overextended investors flooded the exchange with sell orders. The Dow fell 30.57 points to close at 230.07 on that day. The glamour stocks of the age saw their values plummet. Across the two days, the Dow Jones Industrial Average fell 23%.

By the end of the weekend of November 11, the index stood at 228, a cumulative drop of 40% from the September high. The markets rallied in succeeding months, but it was a temporary recovery that led unsuspecting investors into further losses. The Dow Jones Industrial Average lost 89% of its value before finally bottoming out in July 1932. The crash was followed by the Great Depression, the worst economic crisis of modern times, which plagued the stock market and Wall Street throughout the 1930s.

October 19, 1987

DJIA (19 July 1987 through 19 January 1988). Black Monday Dow Jones.svg
DJIA (19 July 1987 through 19 January 1988).

The mid-1980s were a time of strong economic optimism. From August 1982 to its peak in August 1987, the Dow Jones Industrial Average (DJIA) grew from 776 to 2722. The rise in market indices for the 19 largest markets in the world averaged 296 percent during this period. The average number of shares traded on the NYSE(New York Stock Exchange) had risen from 65 million shares to 181 million shares. [26]

The crash on October 19, 1987, a date that is also known as Black Monday, was the climactic culmination of a market decline that had begun five days before on October 14. The DJIA fell 3.81 percent on October 14, followed by another 4.60 percent drop on Friday, October 16. On Black Monday, the Dow Jones Industrials Average plummeted 508 points, losing 22.6% of its value in one day. The S&P 500 dropped 20.4%, falling from 282.7 to 225.06. The NASDAQ Composite lost only 11.3%, not because of restraint on the part of sellers, but because the NASDAQ market system failed. Deluged with sell orders, many stocks on the NYSE faced trading halts and delays. Of the 2,257 NYSE-listed stocks, there were 195 trading delays and halts during the day. [27] The NASDAQ market fared much worse. Because of its reliance on a "market making" system that allowed market makers to withdraw from trading, liquidity in NASDAQ stocks dried up. Trading in many stocks encountered a pathological condition where the bid price for a stock exceeded the ask price. These "locked" conditions severely curtailed trading. On October 19, trading in Microsoft shares on the NASDAQ lasted a total of 54 minutes.

The Crash was the greatest single-day loss that Wall Street had ever suffered in continuous trading up to that point. Between the start of trading on October 14 to the close on October 19, the DJIA lost 760 points, a decline of over 31 percent.

The 1987 Crash was a worldwide phenomenon. The FTSE 100 Index lost 10.8% on that Monday and a further 12.2% the following day. In the month of October, all major world markets declined substantially. The least affected was Austria (a fall of 11.4%) while the most affected was Hong Kong with a drop of 45.8%. Out of 23 major industrial countries, 19 had a decline greater than 20%. [28]

Despite fears of a repeat of the 1930s Depression, the market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday October 22. It took only two years for the Dow to recover completely; by September 1989, the market had regained all of the value it had lost in the 1987 crash. The Dow Jones Industrial Average gained six-tenths of a percent during the calendar year 1987.

No definitive conclusions have been reached on the reasons behind the 1987 Crash. Stocks had been in a multi-year bull run and market P/E ratios in the U.S. were above the post-war average. The S&P 500 was trading at 23 times earnings, a postwar high and well above the average of 14.5 times earnings. [29] Herd behavior and psychological feedback loops play a critical part in all stock market crashes but analysts have also tried to look for external triggering events. Aside from the general worries of stock market overvaluation, blame for the collapse has been apportioned to such factors as program trading, portfolio insurance and derivatives, and prior news of worsening economic indicators (i.e. a large U.S. merchandise trade deficit and a falling U.S. dollar, which seemed to imply future interest rate hikes). [30]

One of the consequences of the 1987 Crash was the introduction of the circuit breaker or trading curb on the NYSE. Based upon the idea that a cooling off period would help dissipate investor panic, these mandatory market shutdowns are triggered whenever a large pre-defined market decline occurs during the trading day.

Crash of 2008–2009

The collapse of Lehman Brothers was a symbol of the Crash of 2008 Lehman Brothers Times Square by David Shankbone.jpg
The collapse of Lehman Brothers was a symbol of the Crash of 2008
OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008. OMX Iceland 15 SEP-OCT 2008.png
OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008.

On September 16, 2008, failures of massive financial institutions in the United States, due primarily to exposure to packaged subprime loans and credit default swaps issued to insure these loans and their issuers, rapidly devolved into a global crisis. This resulted in a number of bank failures in Europe and sharp reductions in the value of stocks and commodities worldwide. The failure of banks in Iceland resulted in a devaluation of the Icelandic króna and threatened the government with bankruptcy. Iceland obtained an emergency loan from the International Monetary Fund in November. [31] In the United States, 15 banks failed in 2008, while several others were rescued through government intervention or acquisitions by other banks. [32] On October 11, 2008, the head of the International Monetary Fund (IMF) warned that the world financial system was teetering on the "brink of systemic meltdown". [33]

The economic crisis caused countries to close their markets temporarily.

On October 8, the Indonesian stock market halted trading, after a 10% drop in one day.

The Times of London reported that the meltdown was being called the Crash of 2008, and older traders were comparing it with Black Monday in 1987. The fall that week of 21% compared to a 28.3% fall 21 years earlier, but some traders were saying it was worse. "At least then it was a short, sharp, shock on one day. This has been relentless all week." [34] Business Week also referred to the crisis as a "stock market crash" or the "Panic of 2008". [35]

From October 6–10 the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell over 1,874 points, or 18%, in its worst weekly decline ever on both a points and percentage basis. The S&P 500 fell more than 20%. [36] The week also set 3 top ten NYSE Group Volume Records with October 8 at #5, October 9 at #10, and October 10 at #1. [37]

Having been suspended for three successive trading days (October 9, 10, and 13), the Icelandic stock market reopened on 14 October, with the main index, the OMX Iceland 15, closing at 678.4, which was about 77% lower than the 3,004.6 at the close on October 8. This reflected that the value of the three big banks, which had formed 73.2% of the value of the OMX Iceland 15, had been set to zero.

On October 24, many of the world's stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices. [38] In the US, the DJIA fell 3.6%, i.e. not as much as other markets. [39] Instead, both the US dollar and Japanese yen soared against other major currencies, particularly the British pound and Canadian dollar, as world investors sought safe havens. Later that day, the deputy governor of the Bank of England, Charles Bean, suggested that "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history." [40]

By March 6, 2009 the DJIA had dropped 54% to 6,469 (before beginning to recover) from its peak of 14,164 on October 9, 2007, over a span of 17 months. [41] [42]

Mitigation strategies

One mitigation strategy has been the introduction of trading curbs, also known as "circuit breakers", which are a trading halt in the cash market and the corresponding trading halt in the derivative markets triggered by the halt in the cash market, all of which are affected based on substantial movements in a broad market indicator. Since their inception, circuit breakers have been modified to prevent both speculative gains and dramatic losses within a small time frame. [43]

United States

There are three thresholds, which represent different levels of decline in the DJIA in terms of points. These thresholds are set at the beginning of each quarter to establish a specific point value. For example, in the second quarter of 2011, Threshold 1 was a drop of 1200 points, Threshold 2 was 2400 points, and Threshold 3 was 3600 points. [44]


In France, the main French stock index is called the CAC 40. Daily price limits are implemented in cash and derivative markets. Securities traded on the markets are divided into three categories according to the number and volume of daily transactions. Price limits for each security vary by category. For instance, for the more[ most? ] liquid category, when the price movement of a security from the previous day's closing price exceeds 10%, the quotation is suspended for 15 minutes, and transactions are then resumed. If the price then goes up or down by more than 5%, transactions are again suspended for 15 minutes. The 5% threshold may apply once more before transactions are halted for the rest of the day. When such a suspension occurs, transactions on options based on the underlying security are also suspended. Further, when more than 35% of the capitalization of the CAC40 Index cannot be quoted, the calculation of the CAC40 Index is suspended and the index is replaced by a trend indicator. When less than 25% of the capitalization of the CAC40 Index can be quoted, quotations on the derivative markets are suspended for half an hour or one hour, and additional margin deposits are requested. [43]

See also



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The Chinese stock market turbulence began with the popping of the stock market bubble on 12 June 2015 and ended in early February 2016. A third of the value of A-shares on the Shanghai Stock Exchange was lost within one month of the event. Major aftershocks occurred around 27 July and 24 August's "Black Monday". By 8–9 July 2015, the Shanghai stock market had fallen 30 percent over three weeks as 1,400 companies, or more than half listed, filed for a trading halt in an attempt to prevent further losses. Values of Chinese stock markets continued to drop despite efforts by the government to reduce the fall. After three stable weeks the Shanghai index fell again on 24 August by 8.48 percent, marking the largest fall since 2007.

The 2015–16 stock market selloff was the period of decline in the value of stock prices globally that occurred between June 2015 to June 2016. It included the 2015–16 Chinese stock market turbulence, in which the SSE Composite Index fell 43% in just over 2 months between June 2015 and August 2015, which culminated in the devaluation of the yuan. Investors sold shares globally as a result of slowing growth in the GDP of China, a fall in petroleum prices, the Greek debt default in June 2015, the effects of the end of quantitative easing in the United States in October 2014, a sharp rise in bond yields in early 2016, and finally, in June 2016, the United Kingdom European Union membership referendum, 2016, in which Brexit was voted upon.


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