A bull run in China’s stock markets has given way to what could be a crash (Chart 1). When the Shanghai Composite Index (SCI) peaked at 5166 in mid June 2015, it had risen by 150 per cent relative to its value at the corresponding time in the previous year. It then fell by more than 30 per cent over the next month to just above 3500. The market was clearly bearish to the extreme. The Chinese government chose to intervene with a host of measures aimed at propping up the market.
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