It included the 2015–2016 Chinese stock market turbulence, in which the SSE Composite Index fell 43% in just over two months between June 2015 and August 2015,[1][2] which culminated in the devaluation of the yuan.
[3][4] Investors sold shares globally as a result of slowing growth in the GDP of China, a fall in petroleum prices, the Greek debt default in June 2015,[5] the effects of the end of quantitative easing in the United States in October 2014,[6] a sharp rise in bond yields in early 2016, and finally, in June 2016, the 2016 United Kingdom European Union membership referendum, in which Brexit was voted upon.
[11] On Monday, August 24, world stock markets were down substantially, wiping out all gains made in 2015, with interlinked drops in commodities such as oil, which hit a six-year price low, copper, and most of Asian currencies, but the Japanese Yen, losing value against the United States Dollar.
Hedge funds, which, for the most part, had long positions on the eve of the downturn, suffered substantial losses as stocks such as Apple, Citigroup, Facebook and Amazon lost value.
[20][21][22] Tuesday, August 25, was another day of sharp losses on the SSE Composite Index, which dropped 7.6%, making a 40% downturn in the market since June.
[35] In February 2016, British Prime Minister David Cameron announced that the Government was to recommend that the UK should remain in the EU and that the referendum would be held on 23 June, marking the official launch of the campaign.
With the official launch, ministers of the UK Government were then free to campaign on either side of the argument in a rare exception to Cabinet collective responsibility.
[36] This announcement led British pound fell to $1.393, the lowest since 2009 and lead the uncertainty in stock markets around the world.
[44] Investors in worldwide stock markets lost more than the equivalent of 2 trillion United States dollars on 24 June 2016, making it the worst single day loss in history.
[49] The euro fell by almost 4% against the United States dollar, while traditional "safe haven assets" such as gold and the Japanese Yen surged.
[52] It issued a statement that read: "Following the United Kingdom's vote to leave the European Union, the Swiss franc came under upward pressure.
[53] Sweden's Riksbank issued a statement that read it was "following the financial market developments closely and has a continuing dialogue with other authorities.
An unnamed policymaker with knowledge of the Reserve Bank of India's (RBI) plans for related market management said that it was "prepared to deal with any volatility".
[58] Unnamed officials at SEBI said that they were in touch with the RBI on the market developments amid surveillance being beefed up to curb excess volatility and possible manipulations in various trading segments, including currency derivatives.
The Philippines Central Bank issued a statement that read it was closely monitoring the foreign exchange market and would be prepared to act to ensure orderly transactions and smooth volatility.
The South African rand experienced its largest single-day decline since the Great Recession in 2008, dropping in value by over 8% against the United States dollar.
[63] During a press conference on 27 June 2016, Chancellor of the Exchequer George Osborne attempted to reassure financial markets that the UK economy was not in serious trouble.
This came after media reports that a survey by the Institute of Directors suggested that two-thirds of businesses believed that the outcome of the referendum would produce negative results as well as the dropping value of the sterling and the FTSE 100 which began on Friday, 24 June 2016.
[65] "No-one should doubt our resolve to maintain the fiscal stability we have delivered for this country .... And to companies, large and small, I would say this: the British economy is fundamentally strong, highly competitive and we are open for business.
At the close of trading, the domestically-focused FTSE 250 index was down approximately 14% as compared to the day before the referendum results were published (23 June 2016).
"[77] On the other hand, U.S. businessman and candidate for the Republican presidential nomination Donald Trump stated on August 24 that he felt that the stock selloff could get "messy".
[78] Also on the 24th, a fellow candidate for the Republican nomination, Chris Christie, blamed President Obama for borrowing too much money from China, saying that the U.S. and Chinese economy had become "interdependent".
That substantial capital and huge liquidity gives banks the flexibility they need to continue to lend to UK businesses and households even during challenging times.Moreover, as a backstop to support the functioning of the markets the Bank of England stands ready to provide more than £250bn of additional funds through its normal market operations.
We expect institutions to draw on this funding if and when appropriate.It will take some time for the UK to establish a new relationship with Europe and the rest of the world.
Her Majesty's Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have remained in close contact including through the night and this morning.
[81] By the end of Friday's trading, both HSBC and Standard Chartered had fully recovered, while Lloyds, RBS Group and Barclays remained more than 10% down.
The group's chief economic adviser, Peter Soencer, also argued there would be more long-term implications, and that the UK "may have to adjust to a permanent reduction in the size of the economy, compared to the trend that seemed possible prior to the vote".
[88] On July 19, the International Monetary Fund (IMF) reduced its 2017 economic growth forecast for the UK from 2.2% to 1.3%, but still expected Britain to be the second fastest growing economy in the G7 during 2016; the IMF also reduced its forecasts for world economic growth by 0.1% to 3.1% in 2016 and 3.4% in 2017, as a result of the referendum, which it said had "thrown a spanner in the works" of global recovery.
[89] On July 20, a report released by the Bank of England said that although uncertainty had risen "markedly" since the referendum, it was yet to see evidence of a sharp economic decline as a consequence.