BEIJING: Chinese stocks plunged on Tuesday as the yuan weakened against the dollar, reigniting fears that Beijing may be intent on a deeper devaluation of the currency despite the central bank’s comments that it sees no reason for a further slide.
Concerns that companies may pull more money out of China as the economy slows and speculation that the government may begin to scale back its massive support for the country’s stock markets also prompted investors to take profits after a run-up in prices over the last few weeks, traders said.
The Shanghai Composite Index closed down 6.1 percent at 3,749.12 points in its biggest daily decline since July 27, snapping a three-day winning streak.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 6.2 percent at 3,825.41.
Volatility in both indexes spiked in the afternoon in what is becoming a mysteriously recurring pattern in China’s stock markets since Beijing stepped in to avert a full-blown price crash in early summer.
The yuan fell against the dollar on Tuesday despite a slightly stronger midpoint set by the central bank, and traders expect the currency to remain under downward pressure as the economy struggles.
