With the Chinese stock market turmoil that incited global panic abated for now, a look at how it happened and some lessons:
Q: Why did the Chinese market plunge so much?
A: China's main stock index tumbled nearly 23 percent over five days before returning to positive territory Thursday and Friday. It had more than doubled over 12 months from June 2014 as state media encouraged the public to invest even after economic growth began to slow.
That fostered expectations the government would intervene if needed to keep the market from falling. By June, stocks were trading at sky-high valuations.
Prices started to fall in mid-June after regulators limited the amount brokerages could lend to customers to trade shares.
That prompted concern that authorities would no longer support share prices. As those fears spread, panicky investors dumped shares. The central bank's Aug. 11 devaluation of the yuan accelerated the declines by fanning concern the move would accelerate an outflow of capital.
Authorities responded with a flurry of measures to shore up prices, including barring big shareholders from selling and ordering brokerages and pension funds to buy. But that confused small shareholders and fueled panic.
Q: Why did global investors react with such alarm?
A: China is the world's second-largest economy and has been a key driver of global growth for several years. Signs of a slowdown began to emerge earlier this year, but the market kept climbing. So when the market began to slide, global investors worried.
When the drops worsened and the Shanghai index tumbled 8.5 percent last Monday, that spooked international investors who were already worried about the possibility of higher U.S. interest rates, prompting a global sell-off.
Most people outside China can't even invest in the country's stock market, but as worries persist about tenuous global growth, "anything that suggests that the prospects look more dim is going to send equity investors running for cover," said Lori Heinel, portfolio strategist at State Street Global Advisors.
Q: Is China's stock market a reliable indicator of its economic prospects?
A: Not really. Chinese stock markets have little connection to the rest of the government-dominated economy. The biggest companies are state-owned and their health is decided by official policy, not the market. So traders respond to government cues and the availability of credit to finance speculation.
Stock prices can rise when the economy is weakening or fall when conditions are improving. "The plunge in recent weeks has little to do with the general economic landscape," said Zuo Xiaolei, chief economist for Galaxy Securities in Beijing.
Q: What lessons can investors learn from this?
A: It's a reminder that stock markets can and do swing wildly, and should be viewed as long-term investments for people with a tolerance of risk.
Another lesson is that investors need to know more about China's stock market, even though it's a poor indicator of China's well-being, and most of the world is shut out of it.