China stocks plunge to eight-month lows before paring losses
SHANGHAI – China’s major stock indexes slumped more than 6 percent to 8-month lows in early trade on Tuesday before paring losses, after a catastrophic Monday that destabilised financial markets around the world.
By 0200 GMT, the CSI300 index .CSI300 was down 4.4 percent at 3,132.26 points, while the Shanghai Composite Index .SSEC Shanghai composite lost 4.8 percent to 3,057.04 points.
Chinese stocks plunged more than 8 percent on Monday in panic selling, with flagship indexes smashing key support levels and posting their biggest one-day percentage losses since the height of the global financial crisis in 2007.
Stock futures pointed to expectations of further losses. China CSI300 stock index futures CIFc1 for September fell 2.6 percent to 3,053.4, 78.86 points below the current value of the underlying index.
In Hong Kong, the Hang Seng index .HSI in Hong Kong reversed early losses and was trading up 1.5 percent.
Still, investor sentiment remained weak.
“Global investors are cannibalising each other. Calling it a market disaster is not an overstatement,” said Zhou Lin, an analyst at Huatai Securities.
“The mood of panic is dominating the market … And I don’t see any signs of meaningful government intervention.”
The central bank made a large 150 billion yuan ($23.43 billion) injection into the interbank market on Tuesday morning via its regular open market operations.
However, similar large injections last week had little impact on stock market sentiment as the funds only remain in the market for seven days.
In fact, many investors worry the injections are being used as a substitute for the longer-term easing to bank reserve requirement ratios which would free up far more substantial sums of cash for long-term investment.
After a year of heady gains, Chinese markets have been buffeted by increasing signs that economic growth is faltering, and the central government’s efforts to reassure and backstop stock investors have been sunk by a succession of weakening indicators.
Benchmark indexes not only gave up all the gains made since Beijing’s unprecedented stock market rescue in July, in which hundreds of billions of state dollars were ordered into the market, but have entered negative territory for the year. -Reuters