China’s Shanghai Composite peaked on June 12, 2015, before a major stock-market fall.
The index had more than doubled in the year leading to that peak, driven partly by rising retail participation and extensive margin borrowing. Many investors bought shares with borrowed money, increasing both potential gains and the danger of forced selling. When prices began to decline, leveraged investors faced margin calls and rushed to sell.
The Shanghai Composite then fell sharply during the summer, including a dramatic plunge on June 26 and another severe global-market shock on August 24. Chinese authorities responded with measures such as trading suspensions, restrictions on some sales, and support for the market.
The 2015 episode is often described as a crash, but it was not the same kind of event as the 2008 global financial crisis. China’s economy continued growing, and the disruption was concentrated in financial markets. The episode nevertheless highlighted the risks of leverage, herd behavior, and rapid expansion of individual stock ownership.