“This is a real disaster and it seems nothing can stop it,” Chen Gang, Shanghai-based chief investment officer at Heqitongyi Asset Management Co., told Bloomberg. “If we don’t cut holdings ourselves, the fund faces risk of forced closure. Many newly-started private funds suffered that recently. I hope we can survive.”
Asian markets followed China with a broad selloff.
Japan’s Nikkei has closed 4.61 percent down. Hong Kong’s Hang Seng is 5.17 percent in deficit. Mumbai’s Sensex is down over 4 percent.
The ripple effects are being felt on the European markets.
London’s FTSE is down 2.71 percent in early trading. Germany’s DAX is losing 2.66 percent, sliding below the 10,000-point mark for the first time since January, as of 09:23 GMT.
READ MORE: Global markets enter correction on China fears
The European stock markets have continued last week’s negative trend, when 13 out of 18 Western European markets lost 10 percent or more, with Germany’s DAX down 18 percent. London’s FTSE 100 Index suffered its biggest weekly drop in 2015, slumping 5.2 percent.
Commodities are down across the board with Brent crude trading below $44 per barrel, which is a six-and-a-half-year low.
READ MORE: WTI crude drops below $40 first time since 2009
On Friday, the US WTI crude benchmark dropped below $40 per barrel in an eighth straight weekly decline, the longest falling streak in almost 30 years.
The Russian ruble has fallen to its lowest level since February against major currencies, dragged down by both weak oil and Chinese stocks. The ruble was trading at over 71 rubles against the US dollar and 81.78 rubles against the euro as of 09:25 GMT.
Equity markets in Moscow are in the red with the RTS losing 5.51 percent and the MICEX down over two percent as of 09:25 GMT.
Over the last month, the Chinese government has taken drastic measures to stop the stock market’s decline. On Sunday, the Xinhua news agency reported that Beijing would allow its main state pension fund to invest up to 30 percent of its net assets in China-listed shares for the first time.
In mid-August, the People’s Bank of China devalued the yuan over three consecutive days, stopping at a 4.4 percent overall depreciation. The move intended to help faltering exports sowed panic in the world’s equity markets and may have started a new wave of currency wars.
READ MORE: Biggest slowdown in Chinese manufacturing in 6yrs
The real Chinese economy has been showing signs of slowing growth. In a report published last Friday by Caixin and Markit, it became clear that manufacturing has been losing momentum. The Purchasing Managers’ Index (PMI), its key indicator, saw a fall to 47.1 from 47.8 in July. This is the lowest level since March 2009 and shows a contraction.