Last April, I wrote that the Chinese stock market was red hot and that I didn’t watch China closely enough to say whether it was in a bubble, but it was an expensive market (click here for the article).

By the end of summer, it was pretty clear that there was a bubble and that it was bursting (click here for the article), as we can see in the chart below.  The selloff in China definitely hurt stock prices here and contributed to the August correction in the US.

While we had a terrific October that essentially reversed the correction, I have to admit that I didn’t realize just how well the Chinese markets had done during that time period.

This chart shows the price returns (in Chinese yuan) for the past three years and seven days.  I wanted to go back a little bit just to show how much the market rallied.

I also find it surprising that even during this short time frame that even after their bear market, their two main markets are still up more than 50 and 100 percent respectively.

The current Chinese stock market selloff was sparked by a small but meaningful devaluation in the Chinese yuan versus the dollar, which was also one of the contributing factors this summer (click here for the article).

So far this year, the yuan has fallen -1.5 percent versus the dollar, compared to a decline of -4.4 percent in 2015.

It hasn’t traded at these levels since early 2011 and there are rumors floating around that the Chinese government will allow the currency to drop by as much as 10 percent in the coming weeks, which would be a departure from their usual measured pace.

Of course, the underlying issue is the weakness in the Chinese economy and what the spillover effects may be in the developed markets.

Earlier this week, for example, the International Monetary Fund (IMF) cut their global growth estimates by -0.4 percent to 2.9 percent, citing the slowdown in China.

While we are somewhat insulated from what happens to Chinese stocks since their markets are largely closed to outsiders, their economic heft matters immensely to the rest of the world and will probably continue to weigh on our markets for some time.