Chinese shares suffer their biggest one day fall since the start of the financial crisis, hammering stock markets around the world as concerns mount over weakness in the domestic economy.
Despite warnings by the Chinese government against what it called “malicious short selling” and the injection of billions of yuan in stimulus money, the Shanghai Composite Index fell by 8.49 percent to close at 3,209.91.
Only around 100 stocks remained trading into the afternoon as the other 993 stocks listed on the exchange either halted trading voluntarily or were forced to do so after falling by the 10 percent daily limit.
Global stock markets have been left reeling from the sell-off in Shanghai, with investors around the world scrambling to get out of stocks considered risky or overvalued in light of a potential slowdown in the Chinese economy.
“Markets are panicking. Things are starting to look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable,” said Takako Masai, the head of research at Shinsei Bank in Tokyo.
So far fallout from panic in the markets stands as follows:
Fraser Howie, the co-author of Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise, said Beijing’s handling of the stock market calamity raised real questions about the leadership of president Xi Jinping and prime minister Li Keqiang.
“I think there is now growing realisation – domestically and offshore – that the Chinese leadership are not in control of the situation. Not only are they not in control of it, they don’t even seem to grasp the problems at times,” said Howie.
Previously on Shanghaiist:
China’s recent stock market rally driven by uneducated investors
Free trade zone speculation fuels 275 billion yuan bubble for stocks with ‘Shanghai’ in name
By Dominic Jackson
[Image via Quartz]