Shanghai Composite fell 13.3% this week
It was the worst week for Chinese stocks since Lehman Brothers collapsed in 2007. An epic glut of cheap leveraged money has been sloshing around in Chinese markets as stocks grow easier to buy for China's enormous middle class.
There was speculation about a rate cut last weekend and when it didn't come the rout in shares started. It hasn't stopped since and markets fell to the lowest close in nearly a month.
China at the moment is an astonishing market and the Shanghai Composite is still up 122% since this time last year.
There isn't much support on the chart but sentiment would completely reverse if the PBOC delivered some kind of stimulus this weekend.
It's said that Chinese investors are the least risk-averse in the world. Most of them had nothing 10 years ago and they aren't scared of having nothing once again.
I don't know if it's true but leveraged trading in Chinese stocks takes an incredibly brave disposition.
