BEIJING: Chinese stocks fell, following the biggest swings in the Shanghai Composite Index since the early 1990s, after margin debt slumped for a seventh day and a factory gauge remained sluggish.
The Shanghai Composite slid 5 percent to 4,063.08 at 2:48 p.m., dragged down by financial and industrial shares. Large volatility in stock prices may undermine household consumption, according to the World Bank. The index changed directions at least 10 times Wednesday after posting the biggest intraday swings since the early 1990s the day before.
“We see big caps underperforming and the trend may continue as the economy has no apparent signs of a pick-up,” said Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co., which oversees about $3.3 billion. “Investors are still recovering confidence.”
Concern is growing China’s world-beating stocks rally will falter as speculators unwind their margin positions and interest-rate cuts fail to stem the slowdown in the world’s second-biggest economy. Last month, the China Securities Regulatory Commission said brokerages’ margin lending should be capped at four times their net capital.
