Stocks in China plummeted 6.4% on Thursday, snuffing out a recent rally in brutal fashion.
The benchmark Shanghai Composite slid lower throughout the day, bringing losses for this year to close to 23%.
There’s no question the start of 2016 has been rocky for Chinese markets. The government just sacked the head of its stock market regulator, the yuan has struggled against the dollar, and investors have been pulling billions of dollars out of the country.
Thursday’s market plunge followed a rally of about 10% since late January, providing yet another stark reminder to investors that Chinese markets remain volatile.
It comes at an inconvenient time for the Chinese government as it prepares to host a meeting of G20 finance ministers and central bankers in Shanghai starting Friday.
Sharp falls in Chinese stock markets in early January helped fuel a wave of selling around the globe. The situation has stabilized somewhat in recent weeks, but underlying concerns remain.
China is now posting its slowest economic growth in 25 years, raising questions about just how quickly the country’s once red-hot growth engine is cooling off.
Some of that is due to seasonal variations — for China, the beginning of the calendar year is notoriously volatile as the country largely grinds to a halt for the Lunar New Year holiday. Factories and businesses shut down as workers return home to celebrate with family.
A clearer picture of overall economic health often doesn’t start to emerge until at least March.
But that doesn’t help investor confidence after a roller-coaster ride on the markets last year.
Chinese stocks posted a meteoric rise for the first half of 2015, before a spectacular summer crash gave investors whiplash.