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A turning point for Hong KongThe major reason US investors should pay attention to Hong Kong is that its performance relative to the Shanghai Composite will in large part define the future course of the stock market in China.

The People’s Bank of China reformed the exchange rate formation system on August 11 to better reflect market development in the exchange rate of the Chinese yuan against the US dollar.

The last market correction was four years ago.

China’s central bank today (Aug 25) cut interest rates and lowered the amount of reserves the country’s banks must hold, cranking up support for a stuttering economy and a plummeting stock market that has sent shockwaves around the globe.

The People’s Bank of China, the country’s central bank, on Tuesday morning moved to devalue its tightly controlled currency, the Yuan, following weaker than expected Chinese import and Export data over the weekend.

The US stock market has rebounded slightly following an early trading plunge in the wake of a big drop in Chinese stocks. Minutes after the opening bell Monday, the major indices tumbled wildly, making Friday’s 530-point sell-off in the Dow look like a minor blip, but...

European markets continued to fall during the trading session as fears of currency wars ignited a fresh bout of selling across global markets.

“The initial reaction in the equity market was aggressive as many expected that this news would be out at the weekend”, Guardian Stockbrokers’ director of trading, Atif Latif, said.

Concerns about a China-led global economic slowdown and tumbling commodities prices had U.S. traders fearing the worst after a 5 percent decline in the both the S&P and Dow last Thursday and Friday.

The benchmark Shanghai Composite Index fell 8.5 percent, its biggest one-day loss since February 2007.

The stock market’s steep decline this week has pushed the Dow Jones industrial average into what is known as “correction” territory.

Behind that were signs Beijing is struggling to prevent a stall in the world’s second largest economy, and that its actions, like the devaluation of the Yuan last week, was having a negative impact throughout emerging markets and would drag in developed economies as well.

Companies that primarily drill for oil onshore in the U.S., such as Continental Resources, have suffered even steeper declines. “This is about growth“.

A “correction” is a Wall Street term for when an index like the Dow industrials or the Nasdaq – or an individual stock – falls 10 percent from its most-recent high. Crude oil briefly dipped below $40 a barrel for the first time since March of 2009.

Relatively few Chinese are invested in the stock market, and the vast majority of Chinese companies still have access to financing.