The world's financial industry was shocked after China devalued the yuan for two consecutive days. Many economists were led to believe that the latest move from the second largest economy in the world is probably suffering from a major economic meltdown.
According to The Guardian, China's recent move shocked many investors in the global market. The devaluation of the Chinese yuan led to a significant drop in shares and forces commodity prices to hike. This trend could potentially lead to a currency war which in turn would destabilize the global economy.
The recent move from China causes widespread loss not only in Asia but also in the European stock market. The stock market in Europe reported loss amounting to about one percent.
The recent devaluation of the Chinese currency is the lowest point in the last four years.
HSBC economist told the Wall Street Journal, "Beijing's latest move to devalue the yuan will help boost its exports, but it needs to take more measures to spur domestic demand."
The sector that suffered the most in the recent yuan devaluation was the airline market. Investors speculate that the drop in the value of the yuan could potentially led to the rise of fuel cost. Air China reported that it lost around 4.4 percent while its rival China Southern and China Eastern both reported losses of around six percent.
In Japan, the Nikkei stock market suffered about 1.6 percent in losses while South Korea's KOSPI stock exchange reported losses of around .56 percent.
The recent devaluation of the Chinese yuan raised suspicion that China is facing a slide in the exchange rate. It is also the biggest single day devaluation since the massive drop recorded in 1994.