Singapore investor Charles Khong has long been of the view that stock markets at the start of the year are typically associated with the post-holiday blues.
"Markets usually edge up on low volume. People take time to recover from the holidays and traders don't usually jump in straightaway," said the 52-year-old, who has been investing for 20 years.
That theory went out the window when he turned on his computer on Monday and saw all the numbers in red, with sell orders piling up.
"It's like everyone woke up from a bad dream and rushed to their terminals in a panic." The China stock market was in freefall and as it crashed, many Asian markets and global markets plunged in its wake.
Fears over the slowing Chinese economy gave stock markets one of their worst starts to the year, with trillions of dollars in value wiped out.
TOO MUCH BAD NEWS
You had the sabre rattling in the Middle East and then it was Kim Jong Un's North Korea, and fear over the Chinese economy. This was a perfect storm of events that caused investors to run for the hills.
CIMB PRIVATE BANK ECONOMIST SONG SENG WUN, on how world events exacerbated economic fears.
The mayhem started on Monday, when a survey of China's manufacturing confirmed fears that growth was slowing in the second largest economy. The yuan also fell to its lowest in five years.
Chinese stock markets fell 7 per cent during midday trading, triggering a mechanism that forced regulators to close the exchanges.
Global markets dived, as panicked selling mauled stock exchanges from New York to London to Singapore. The market resumed its descent on Tuesday morning but a concerted intervention by the Chinese government managed to stem the bleeding, temporarily. Media reports said that the government had asked state funds to buy into Chinese companies on the stock market while the central bank pumped 130 billion yuan (S$28.4 billion) into the financial system.
The moves seemed to calm markets, with shares rising slightly on Wednesday. But the reprieve was short-lived. On Thursday, another wave of panicked selling again triggered the circuit breakers, forcing exchanges to close after just 30 minutes of trading.
The carnage was massive. Over the past week, investors lost an estimated US$2.3 trillion (S$3.3 trillion) across global markets. In Singapore alone, the damage to local stocks was about $27 billion. The crash was so alarming that legendary investor George Soros warned that global markets were facing a crisis. "When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008," he said on Thursday.
Analysts said a combination of economic, financial and political factors created a perfect storm for a market crash.
One big factor is the state of the Chinese economy, which has shown signs of a slowdown as it moves to a new model of growth - from an export-led and investment-driven one to one where domestic demand fuels expansion.
These fears were amplified when the Chinese government devalued the currency, weakening it against the US dollar and Japanese yen.
"Since November last year, the Chinese yuan... has depreciated by almost 3 per cent, triggering market concerns that the People's Bank of China is seeking to devalue the currency to support the economy," said analysts at ABN Amro.
This then led to speculation that emerging economies, such as Brazil and Indonesia, may also devalue their currencies to keep their exports competitive.
Many companies in emerging markets had taken on huge levels of debt over the past few years as their home economies boomed. Weakening currencies and slower growth could result in many of these companies defaulting on their loans, resulting in a debt crisis not unlike the one that occurred in the Asian financial crisis in 1997.
What is making economic fears even worse is rising geopolitical tension. Investors were spooked when a row between Saudi Arabia and Iran raised the spectre of another conflict in the Middle East.
North Korea also claimed that it had tested a hydrogen bomb, which is several times more powerful than the bombs dropped on Hiroshima and Nagasaki.
"You had the sabre rattling in the Middle East and then it was Kim Jong Un's North Korea, and fear over the Chinese economy. This was a perfect storm of events that caused investors to run for the hills," said CIMB Private Bank economist Song Seng Wun.
Mr Hugh Young, a director at Aberdeen Asset Management, also noted that Chinese markets have been driven by speculation over the past year. Between June 2014 and June last year, the Shanghai Composite Index rose from 2,050 points to about 5,166 points at its peak - a jump of nearly 250 per cent.
Much of this rise was fuelled by Chinese retail investors borrowing heavily to buy stocks.
"There was tremendous speculation at the same time as the economy was slowing - one was at odds with the other," said Mr Young.
It is also possible that the market mechanisms, introduced after the stock market crashed last year, that forced the Chinese exchanges to close sowed unnecessary panic among investors.
On Thursday night, in a sudden U-turn, the China Securities Regulatory Commission said it would suspend the circuit breaker mechanism. "Currently, negative effects of the mechanism are larger than positive effects," a spokesman said.
The circuit breakers, which kick in after the stock index falls by more than 7 per cent, are designed to halt trading and restore calm. Instead, analysts said they probably caused more panic as people lined up to sell their stocks as soon as the halt was ended.
But Mr Mo Ji, Amundi Asset Management's chief economist for Asia ex-Japan, believes that while circuit breakers exaggerated market fear, they were not the root cause of the crash.
CIMB's Mr Song agreed: "In hindsight, it's probably a combination of all the factors that led to the crash."
INVESTORS STAYING CAUTIOUS
Experts expect markets to continue to remain volatile, with investors staying cautious over any signs of bad news. Mr Song said that the next few weeks will set the tone, with major economic data on China and the US likely to influence markets in a big way.
China will also continue to slow in the years ahead until it finds its footing in a new domestic-driven economic model while US interest rates will continue to rise. These will generate sharp movements in the markets, but most analysts believe they will recover with time.
Said Aggregate Asset Management executive director Teh Hooi Ling: "A lot of companies are now trading at below the value of the assets they own. Unless the capitalist system totally breaks down, or half the world's population is wiped out, prices will recover."
That is what Mr Khong hopes will happen. After the past week, he is looking at more than $10,000 in paper losses. "I believe I will recover. I bought good blue chip stocks and unless the world ends, they will continue to generate good profits for me."