BEIJING: Chinese shares continued their sharp fall as concerns over the country’s slowing growth and volatile markets sparked panic among traders.
The mainland benchmark index, the Shanghai Composite, closed down 8.5% at 3,209.91 points, extending last week’s losses.
You might also like
The sell-off continued despite Beijing’s latest attempts to reassure investors.
China’s dramatic tumble has dragged down markets across the region.
The Hong Kong Hang Seng index ended the day down 5.2% at 21,251.57, while the region’s biggest stock market, Japan’s Nikkei 225 closed 4.6% lower at 18,540.68 points, its lowest level in nearly five months.
In Australia, the S&P/ASX 200 finished 4.1% lower at 5,001.30, while South Korea’s Kospi index wrapped the day 2.5% lower at 1,829.81 points.
Beijing’s latest intervention, to allow its main state pension fund to invest in the stock market, failed to reassure traders both in China and abroad.
Under the new rules, the fund will be allowed to invest up to 30% of its net assets in domestically-listed shares. By increasing demand for them, the government hopes prices will rise.
line
Analysis: Celia Hatton, BBC News Beijing Correspondent:
“Every time I look at what’s happening in the stock market, I feel sick and I can’t eat. China, please save my money,” a panicked Chinese investor wrote online.
Many others are voicing the same desires: if the mainland’s stock markets are faltering, they want the state to come to the rescue. It’s not just a hope, it’s an expectation.
And that’s where the government’s problem lies. Beijing’s economic reform plan hinges on its pledge to withdraw from the market economy. China’s stock markets will never mature if the state is always hovering in the background, like an anxious parent.
However, 80% of China’s investors are individuals managing their own portfolios. In contrast, foreign stock exchanges are usually dominated by large, institutional investors. Of course, China’s stock market wealth is concentrated among the elite. China’s rookie investors don’t have the ability to sway the markets on their own, because the values of their portfolios are relatively small.
But that still leaves millions of ordinary people dangerously exposed to the fluctuations in the market. And, as China’s internet forums indicate, those are people who believe the government can and should guarantee their investments.
If millions of angry citizens lose their life savings in the stock market and the state does nothing to ease their pain, the government may face its greatest fear: widespread social unrest.
