China stocks tumble, suffer biggest one-day loss in 8 years

(From Reuters)

Chinese shares tumbled more than 8 percent on Monday amid renewed fears about the outlook for the world’s No. 2 economy, reviving the specter of a full-blown market crash that prompted unprecedented government intervention earlier this month.

An investor looks at an electronic board showing stock information at a brokerage house in Nanjing, Jiangsu province

An investor looks at an electronic board showing stock information at a brokerage house in Nanjing

Major indexes suffered their largest one-day drop since 2007, shattering a period of relative calm in China’s volatile stock markets since Beijing unleashed a barrage of support measures to arrest a slump that began in mid-June.

The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen plunged 8.6 percent, to 3,818.73, while the Shanghai Composite Index .SSEC lost 8.5 percent, to 3,725.56 points.

While the falls followed lackluster data on profit at Chinese industrial firms on Monday and a disappointing private factory sector survey on Friday, there was little to explain the scale of the sell-off.

Some analysts said fears that China may hold off from further loosening of monetary policy had contributed to souring investor sentiment.

“The recent rebound had been swift and strong, so there’s need for a technical correction,” said Yang Hai, strategist at Kaiyuan Securities.

He said the trigger was “a sluggish U.S. market amid stronger expectations of a Fed rate rise in the fourth quarter. That, coupled with China’s rising pork prices, fuels concerns that China would refrain from loosening monetary policies further.”

In late June and early July, Chinese authorities cut interest rates, suspended initial public offerings, relaxed margin-lending and collateral rules and enlisted brokerages to buy stocks, backed by central bank cash, to support share prices.

The battery of stabilization measures followed a peak-to-trough slump of more than 30 percent in China’s benchmark indexes, which had more than doubled over the preceding year.

Chinese share markets had recovered around 15 percent since then, before Monday’s renewed sell-off.

Stocks fell across the board on Monday, with 2,247 companies falling, leaving only 77 gainers.

Index heavyweights, including China Unicom (600050.SS), Bank of Communications (601328.SS) and PetroChina (600028.SS), slumped by their daily downward limit of 10 percent.

More than 1,500 shares listed in Shanghai and Shenzhen dived by the daily limit.

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  • Robert Ferrin

    Strange why the panic for this is what any healthy market does correcting the excess, unless its a manipulated market like the one we have in the U.S.,and when this Ponzi scheme goes its going to be a beaut.!!1

  • ifigeniaa

    Year to date the SSE Composite Index gained 15%, but if you just count from June and July 2015, it has lost more than 25%. For long time investors is not bad, but for those casinos gamblers it must be awful.