Shanghai plunge leads broad Asian decline

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HONG KONG: Shanghai shares on Monday suffered their biggest one-day decline in more than eight years, leading a broad Asian decline as they plummeted 8.48 percent and defied government efforts to prop up the market.

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The dollar remained weak after a disappointing read on the US housing market, as investors await the US Federal Reserve’s next policy meeting, while oil was also under pressure owing to a global supply glut.

Most Asian stock markets fell but Chinese shares suffered the most, with the benchmark Shanghai Composite Index closing down 8.48 percent, or 345.35 points, at 3,725.56.

The decline was its biggest single-day drop since February 2007, according to Bloomberg News.

Hong Kong fell 3.09 percent, or 776.55 points, to 24,351.96, while Tokyo declined 0.95 percent, or 194.43 points, to 20,350.10. Seoul gave up 0.35 percent, or 7.15 points, to 2,038.81.

However, Sydney ended higher, adding 0.43 percent on gains by retailers.

Economic data in China caused sentiment to turn, despite official efforts to support the stock market following a rout that began last month.

“Investors are not confident that the bull market will return any time soon,” Jimmy Zuo, a trader at Guosen Securities, told Bloomberg.

“People want to pocket profits after the benchmark index rose past the 4,000 mark.”

On Monday the government said profits of major industrial firms slipped 0.3 percent year-on-year in June, and on Friday, an independent survey of manufacturing activity came in at its weakest reading since April 2014.

Officials have unveiled a range of measures, including a police crackdown on short-selling and a six-month ban on big shareholders selling stock, to avert a slump which began in mid-June.

But stocks on the mainland nevertheless sank on Friday, and again on Monday.

“The soft industrial figure number is adding downward pressure,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai.

Investors also took a lead from their US counterparts, who continued to cash out on Friday as data showed sales of new single-family homes fell in June and May sales were much lower than previously reported.

AFP

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