Welcome Back to the Office. China’s Stock Market Crashed Again.

A heavy-handed metaphor for investing in China’s erratic stock market.

Photo by Kevin Frayer/Getty Images

Meet the new year, same as the old year. Financial markets are off to a rocky start in 2016 thanks to turbulence—where else?—in China, where stocks had to halt trading for the day after a 7 percent drop, sparking a worldwide sell-off. In the U.S., the trusty Dow Jones is down more than 400 points.

The selling in China seems to have started thanks to a combination of disappointing manufacturing data and a falling currency. Some investors may also be trying to unload their holdings before a ban on selling by large shareholders expires on Friday. China’s government slammed those restrictions in place to try to halt the country’s massive stock market declines that spooked the world over the summer. Once it’s lifted, we should expect a lot of pent-up selling.

And that may speak to Monday’s big theme (insofar as there is one): unintended consequences. By attempting to calm its markets a few months ago, China seems to have created new kinds of chaos. On Monday, for instance, the country debuted its new “circuit breaker” system, which pauses trading for 15 minutes once the benchmark CSI300 index drops 5 percent and cuts it off for the day after a 7 percent decline. The idea is to give panicking investors time to think and stop herd-driven selling; the U.S. has somewhat similar safeguards in place although here trading halts when the S&P 500 drops more than 20 percent in a day. But a lot of people seem to think China’s new system exacerbated Monday’s declines, as anxious traders tried to sell their positions before the circuit breakers kicked in.

As CNBC notes, it may just be that China’s 5 percent and 7 percent thresholds are too small given how erratic stock prices are there. But either way, it’s another example of the Chinese government’s ineptitude at market tinkering. I’m guessing the blooper reel will continue well into the new year.