China’s Shanghai Composite Index peaked on June 12, 2015, before a major market sell-off.
The Shanghai Composite reached 5,178.19 on June 12, 2015, after rising dramatically from the previous year. The rally was supported by abundant liquidity, expectations of economic growth, and substantial participation by individual investors. Many investors also used borrowed money, increasing both gains and vulnerability.
Prices then fell sharply. Authorities attempted to stabilize markets through measures including trading suspensions, restrictions on some selling, investigations of short selling, and support from state-linked funds. The turmoil continued into 2016 and contributed to broader concerns about China’s economy and financial regulation.
The Shanghai Composite is not identical to China’s entire stock market. It tracks stocks listed on the Shanghai Stock Exchange, including many large state-owned enterprises, while the Shenzhen exchange and Hong Kong market have different compositions. The 2015 episode is also distinct from the global crash of 2008, although international investors closely watched its possible spillover effects.