Market turmoil: crash or correction?

The Shanghai composite index registered its biggest one-day fall in a decade this week, tumbling over 8% and sparking a world-wide sell-off. Was this just another example of the Shanghai market's renowned volatility - or something more serious?

MoneyWeek reported three weeks ago on fears that China's stockmarket had moved into bubble territory. The Shanghai Composite Index promptly powered even higher, breaking through 3,000 for the first time last Monday. But investors took fright just a day later, sending the index down 8.8%, its biggest one-day fall in a decade.

The plunge sparked a global sell-off. The Dow Jones ended Tuesday down a hefty 3.3%, shedding 416 points, while the FTSE 100 lost 2.3%, falling 148 points. At one point, the falls on Wall Street became so bad that the White House said it was "monitoring the situation", reported The Daily Telegraph.

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