Shares in the Shanghai/Shenzhen soared a whopping 150 percent in the 12 months up to mid-June. Small investors – almost 80 percent of the market – believed in a never-ending party, and often borrowed heavily to be part of the “get rich is glorious” bonanza.
There had to be a correction. Those shares – which had hit a 7-year peak – were obviously overvalued. Couple it with a mountain of data showing essentially a Chinese economic slowdown, and the result was predictable; Shanghai and Shenzhen lost all their gains so far in 2015 – and engineered a massive global sell-off. Even notorious billionaires lost, well, billions in a flash.