The financial markets across the globe are in turmoil, as the Asian markets are in a free-fall. The Shanghai Composite index recorded losses of 8.45 per cent; the CSI dropped 8.56 per cent; Nikkei fell by 4 per cent and Hang Seng was down by 4.7 per cent.  Fears for a slow-down of the Chinese economy and a sharp drop in the country’s share value has led investors to dump shares en masse across all the Asian stock markets. Bonds and the Japanese Yen are rallying, as investors are seeking safe heavens to place their money.

Meanwhile, European stock markets also recorded losses upon opening. The FTSE-100 index in London lost 2.62 per cent; CAC 40 in Paris fell by 3.57 per cent on the opening bell; while in Frankfurt the Dax dropped by 3.15 per cent.

Uncertainty was triggered on August 20, when China’s Central Bank decided to devalue its national currency, the Yuan, by pumping 18.77bn US dollars into the market in order to stem capital flight out of its banking system and stabilize the economy. of course the real problem started emerging earlier, when the Asian economic powerhouse was entering into a period of slow growth and eventually slight recession.

Some market pundits are expressing concerns this could be the ‘kick-off’ of a global currency war, as all world economic ‘players’ are in a different position and have conflicting goals. Europe is in a stage of slow, but steady recovery, at least in theory; while the same is true for the US economy; China, on the other hand, after years of massive growth rates is entering into a period of recession. This, argue analysts is resulting in heightened tensions between the countries, which could eventually cause an open ‘economic war’.