Chinese shares sank 4 percent on Tuesday morning, with losing issues heavily outnumbering gainers, as they followed world markets lower amid fears of a U.S. recession.
The benchmark Shanghai Composite Index, which covers A and B shares, slid 200.13 points, or 4.07 percent, to 4,714.30, after touching a low of 4,575.53. The Shenzhen Component Index was down 529.86 points, or 3.08 percent, to 16,681.07 points at midday.
Losses outstripped gains by 802 to 45 in Shanghai and 610 to 45 in Shenzhen.
Analysts warned of possible panic selling, with Tuesday's losses coming after Chinese shares plunged more than 5 percent on Monday, which was the largest drop in six and a half months in Shanghai.
Chinese shares lost 1.6 trillion yuan (about 219 billion U.S. dollars), or 4.9 percent, of their value last week alone.
Shares have also been undermined by a local factor: planned issues by Ping An Insurance. The company recently announced it would issue another 1.2 billion A shares and up to 41.2 billion yuan in convertible bonds.
Ping An's shares had plunged 7.4 percent to 81.85 yuan as of midday Tuesday. Ping An's rivals were down, too. China Life fell 7.2 percent to 44.75 yuan and China Pacific Insurance was down 5.05 percent to 38.89 yuan.
Other heavyweights also fell and depressed the index, with ICBC down 4.76 percent, PetroChina down 2.8 percent and Sinopec down 5.80 percent.
The U.S. markets were closed for a holiday on Monday but Europe saw its sharpest one-day falls since the Sept. 11 attacks more than six years ago, with major markets off between 5 percent and 7 percent.
Chinese mainland A shares have followed international markets, as more domestic companies are also being listed abroad and quotas for foreign investors are being expanded, according to a report by Northern Wisdom, an investment consulting firm in Jilin Province.
However, the firm also pointed out that the prospects for Chinese stock markets will still mainly rely on the country's economic situation and the performance of listed companies.
The sell-off was continuing in early afternoon trading.
Source:Xinhua
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