China: The fear is back

It's happening again.

Chinese stocks sold off overnight on concerns policymakers are struggling to stop the tide of capital outflows.

The benchmark Shanghai composite index dropped 6.42% to hit 13-month lows, dragging other Asian markets down with it. Japan's Nikkei fell 2.35%.

Here's Bloomberg (emphasis ours):

Outflows jumped in December, with the estimated 2015 total reaching a record $1 trillion, more than seven times higher than the whole of 2014 based on Bloomberg Intelligence data dating back to 2006.

And here's the chart:

Meanwhile, oil also fell back below $30 a barrel after a brief but strong bull run to $32, pushed lower by falling Chinese demand and a supply glut.

Here's Barclays analysts on the drop (emphasis ours):

The fall in price comes on reports of declining diesel demand by China and of Saudi Arabia maintaining investment in energy projects. The supply glut shows no sign of abating, and OPEC's general secretary Abdalla El-Badri called for non-OPEC producers to assist in curbing global production. Other commodities underperformed as well while precious metals registered gains for the day.

And here's the chart:

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