BEIJING: A selloff in Chinese stocks deepened, with the benchmark gauge slumping the most in three months, amid concern authorities will step up measures to crack down on leveraged trading. The Shanghai Composite Index fell as much as 1.9 percent, the biggest intraday loss since Jan. 16, before paring declines to 1.8 percent as of 1:09 p.m. local time. Industrial companies and material producers led losses. The ChiNext small-cap gauge headed for its lowest close since September 2015.
China’s authorities are taking advantage of a strengthening economy to reduce financial-system risk by tightening the screws on leverage. The banking regulator said late Friday it will strengthen a crackdown on irregularities in the financial sector, echoing comments by the securities watchdog just days earlier, while the top insurance official is being investigated on suspicion of “severe” disciplinary violations. The Shanghai Composite has slumped 5 percent since closing at a 15-month high on April 11, the biggest loss among global gauges. “Market sentiment has been damped by recent tightening supervision on all fronts such as the banking commission, insurance commission, securities regulator,” said Ben Kwong, executive director of KGI Asia Ltd. in Hong Kong. “They expressed concern about bubbles and credit defaults. The deleveraging process is still in progress.”
