Shanghai stocks slumped 8.48 percent yesterday, defying government efforts to prop up the market, on worries the world’s second-largest economy is heading for a sharp slowdown, dealers said.
The Shanghai Composite Index closed down 345.35 points to 3,725.56 on turnover of 721.3 billion yuan (US$117.9 billion).
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, slid 162.62 points, or 7 percent, to 2,160.09 on turnover of 667.7 billion yuan.
The falls came as economic data caused sentiment to turn, despite government efforts to prop up the stock market following a rout that began last month, dealers said.
The government yesterday said that profits of major industrial firms slipped 0.3 percent year-on-year last month to 588.57 billion yuan.
On Friday, the preliminary reading of Caixin’s purchasing managers’ index (PMI) — an independent survey of manufacturing activity — came in at 48.2 this month, the weakest reading since 48.1 in April last year.
“Investors are not confident that the bull market will return any time soon,” Guosen Securities Co (國信證券) trader Jimmy Zuo told Bloomberg News.
Stocks fell across the board yesterday, with 2,247 companies falling, leaving only 77 gainers.
Index heavyweights, including China Unicom Ltd (中國聯通), Bank of Communications (交通銀行) and PetroChina Co Ltd (中國石油天然氣), slumped by their daily downward limit of 10 percent.
More than 1,500 shares listed in Shanghai and Shenzhen dived by the daily limit.
Haitong Securities Co (海通證券) analyst Zhang Qi (張崎) said the rise during the past two or three weeks was too big, so the market needs to correct itself.
“And there is also uncertainty about how the government support measures will exit the market,” he said.
China’s securities regulator last week denied studying an exit plan for market-stabilization funds.
The state-backed China Securities Finance Corp (中國證金), tasked with restoring market stability, also denied reducing its holdings in listed companies, state media reported on Wednesday last week.
Elsewhere in Asia, markets mostly retreated yesterday following a fourth successive sell-off in New York, while investors await the US Federal Reserve’s next policy meeting, looking for a handle on its plans for interest rates.
The TAIEX ended 2.41 percent lower at 8,556.68; Tokyo fell 0.95 percent to 20,350.10 points; Hong Kong retreated 3.09 percent to 24,351.96; Seoul gave up 0.35 percent to 2,038.81 points; and Wellington shed 0.38 percent to 5,872.06.
However, Sydney ended higher, adding 0.43 percent on gains by retailers.
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