China stocks plunge rattles Asian markets

China market plummets more than eight percent on the back of last week's losses of 11 percent, as Asian markets tumble.

    Chinese shares plummeted more than eight percent within an hour of trade on Monday in the face of a global sell-off, despite Beijing authorising its state pension fund to invest in stocks in its latest attempt to shore up markets.

    The plunge in China's equities followed last week's losses of 11 percent, and hammered stock prices across Asia, as fears grew that a slowdown in China could send the rest of the world into a recession.

    You don't need to be an economist to understand that there are some very strange things happening in the Chinese economy.

    Adrian Brown, Al Jazeera correspondent

    The Shanghai Composite Index fell 8.5 percent to close at 3,209.91 points, its biggest one-day loss since an 8.8 percent decline on Feb. 27, 2007. The index is down 38 percent from its June 12 peak. 

    Meanwhile, Hong Kong's benchmark Hang Seng Index dropped more than four percent in the first few minutes of trade, the Australian market dived three percent, while Japanese and Taiwanese markets were routed more than two percent.

    More than $5 trillion has been wiped off the value of global equities markets since China's shock devaluation of the yuan on August 11 sparked fears the world's second-largest economy is weaker than thought.

    Al Jazeera's Adrian Brown, reporting from Beijing, said "you don't need to be an economist to understand that there are some very strange things happening in the Chinese economy".

    He said all of the measures taken by the Chinese government, including spending billions on share buy-backs, and Sunday's announcement that it would invest state pensions in the market to offset the declines, were not working.

    "Billions of dollars of state workers' money are now being used to prop up the market, but not only is the market falling, China's economy is also slowing," our correspondent said.

    "China was seen as the engine of global growth but now the outside world is beginning to understand that it is slowing down."

    Our correspondent said malaise on the markets could continue as investors awaited US GDP figures set for release this week, and a decision on whether the US Federal Reserve would lift interest rates.

    Falls follow Wall Street

    Monday's falls followed heavy falls on Wall Street on Friday, with the Dow Jones Industrial Average posting its worst single-day session in four years and all benchmark indices losing more than three percent.

    "The market is going to drop further. It's normal as the markets across the whole world are falling," Qian Qimin, an analyst from Shenwan Hongyuan, told AFP.

    "Financial risk will likely rise quickly, dampening market sentiment," Ken Chen, KGI Securities analyst, told Bloomberg News.

    "Government intervention won't be able to stop the market correction in the long run."

    SOURCE: Al Jazeera and agencies


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