Asian markets closed lower. The central theme of the session was the drop in Chinese equities. The Shanghai Composite was losing more than 5% before recovering part of the losses, devaluing about 3% by 7:00 a.m. (GMT). One reason for the decline was the news that one of the largest brokers in the country would reduce the amount of loans given to retail investors. Many of these investors fund to invest, depositing a collateral (margin) which is just a portion of that funding. Thus, exposure to the equity market is well above the capital of these investors, which exponentially increases the potential either gains or losses. The volatility of the Chinese stock market is typical of a market that has moved away from fundamental economic and moves almost solely due to the liquidity created by the central bank. Sometimes these situations lead to quite abrupt and sudden corrections.