TheChinese stock bubble of 2007 (simplified Chinese:中国股灾;traditional Chinese:中國股災;pinyin:Zhōngguó gǔ zāi) was the globalstock market plunge of February 27, and November 2007,[1] which wiped out hundreds of billions ofmarket value.[2] After rumors that governmentalChinese economic authorities were going to raiseinterest rates in an attempt to curbinflation and that they planned to clamp down onspeculative trading with borrowed money, theSSE Composite Index of theShanghai Stock Exchange tumbled 9%, the largest drop in 10 years.[3]
The plunge inAsian markets sent ripples through the global market as the world reacted to the 9% meltdown in the Chinese stock market.[4] The Chinese Correction triggered drops and major unease in nearly all financial markets around the world.[5]
After the Chinese market drop, theDow Jones Industrial Average in theUnited States dropped 416.02 points, or 3.29% from 12,632.26 to 12,216.24 amid fears for growth prospects, then the biggest one-day slide since theSeptember 11, 2001, terrorist attacks. The S&P 500 saw a larger 3.47% slide. Sell orders were made so fast that an additional analysis computer had to be used, causing an instantaneous 200-point drop at one point in the Dow Industrials.[6]
But, Shanghai Composite then raised to peak 6,092 in October 2007, then plunged between November 2007-November 2008.[7]
