No sign of China's calm, stable Goat year so far

WE wake up to headlines of "Black Monday" - now also referring to Aug 24, 2015 - as equity markets continued to fall explosively after a poor week last week.

Over the weekend, market expectations had been high that the People's Bank of China would offer additional market support on top of the US$300 billion so far, and even lower the RRR (reserve rate ratio) at the important Chinese state banks that could lend into the markets; indeed there were similar hopes too. However there was no intervention, and thus the markets in China fell another 9 per cent and spooked all the other Asian markets.

This emerging loss of confidence in China's policymakers undermined sentiment in Europe and the US, where futures markets foretold of a difficult day. Europe was indeed weak as the euro strengthened, which has this year seen a negative correlation with equities. When the US markets opened, the Dow fell over 1,000 points, and we saw bellwethers fall more than 23 per cent! It was clear during the session that there was intervention to calm markets; however, there can be no doubt investors globally are now concerned and unnerved.