The 2015 China stock market crash and its Asian ripple

How did China’s stock market run up before the 2015 crash?

Shanghai prices rose more than 150% from June 2014 to June 2015. Individual investors dominated the market, with close to 85% of trading, and economist Nicholas Lardy wrote that an unusually large part of the run-up was fueled by retail investors who borrowed to buy equities. A market led by borrowed retail money reacts quickly to changes in confidence.

Lardy also wrote that the market was priced way beyond perfection. Margin trading had grown in earlier years: between 2010 and 2012, average daily margin-purchase turnover rose from 0.78% to 5.15%, and average daily short turnover rose from 0.01% to 0.73%. The numbers show a market that was learning to use leverage well before 2015.

How far did China’s stock market fall in 2015?

The bubble popped on 12 June 2015. Caixin described the Shanghai index falling from more than 5,000 points in mid-June to less than 3,000 in late August, and about a third of A-share value was lost within one month. By 8 to 9 July the Shanghai market had fallen 30% over 3 weeks.

Speed mattered as much as size. A fall of 30% in 3 weeks gave leveraged investors little time to add collateral, so margin calls produced forced sales, and forced sales produced new falls. The pattern repeats the mechanics seen in the 1987 crash and in the Japanese bubble: borrowed money turns a price decline into a funding problem.

How did China respond to the 2015 stock market crash?

From 8 July around 1,300 firms, representing 45% of the market, suspended trading. A group of state-owned institutions known as the national team spent RMB 1.6 trillion buying shares. Regulators also restricted brokerage net selling, suspended new IPOs, and restricted short selling, and brokers received cash backed by central-bank funds.

A six-month ban on sales by holders of more than 5% of a company’s stock was followed by a reported 6% rise in the market. By 30 August 197 people had been arrested for spreading rumours. These steps show a regulator that treated the fall as a threat to stability. They steadied prices for a time and left open the question of what the market would do when support ended.

How did the yuan devaluation of August 2015 add to the fall?

On 11 August 2015 the People’s Bank of China cut the yuan by 1.86% to CN¥6.2298 per US dollar, and on 14 August it devalued again, to CN¥6.3975. The moves reminded investors that China’s growth, currency, and equities are linked. A weaker yuan raised questions about capital flows and about the strength of the economy behind earnings.

On 24 August the Shanghai index fell 8.49%, the largest drop since 2007, and losses exceeded 7% on 25 August. Commentators called the day Black Monday. The sequence of devaluation, then a record-sized fall, shows how a currency decision can turn a domestic stock fall into a regional and global story.

How far did the 2015 China stock market crash reach across Asia?

The Dow fell 1,000 points at the open on 24 August 2015, the largest drop ever at that point. Global companies that relied on the Chinese market lost about $4 trillion in share value, and Yum! Brands reported second-quarter China sales down 10%. The fall in Shanghai therefore reached investors who owned no Chinese share directly.

Asia connects to China through trade. The OECD noted in December 2015 that metals experienced a broad-based drop on the weakness of manufacturing activity in China, and commodity exporters and regional suppliers depend on that demand. This page follows the channels rather than index levels: currency, commodity demand, company sales, and investor sentiment.

What did the January 2016 circuit breaker show about China’s market?

China introduced a circuit breaker in early 2016. On 4 January the market fell to the level that triggered the new trading curb for the first time, and trading was halted; the Shanghai index fell about 6.9% and the CSI 300 fell 8%. On 7 January the curb applied after the first 27 minutes of trading, as stocks plunged about 7%.

Authorities then suspended the circuit breaker, citing concern that it may have intensified investors’ concerns. The episode shows that a trading halt can attract selling as well as calm it, when investors fear being locked in. The design of a halt, including its thresholds, decides its effect.

What does the 2015 China stock market crash teach investors in Asia?

3 lessons stand out. Borrowed retail money amplifies both the rise and the fall: a gain of more than 150% in a year was followed by a loss of about a third in a month. State support can slow a fall and leaves the cause of the fall in place. Currency decisions can move equity markets within days, so a stock holder in Asia benefits from watching the yuan.

As of October 2026 investors in Singapore, Hong Kong, and ASEAN can test their exposure to China-linked shocks on the EQOS Asia simulator, which compares a soft landing, a correction, and a crash. The series on the stock market crash maps the other historical cases. This page is general information, not investment advice.

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About the author

Stéphane Jambu

President, EQOS Forecast Asia

Stéphane Jambu leads EQOS Forecast Asia and works as a consultant in e-commerce, search visibility, and AI. LinkedIn profile