Chinese stock sink on shattered investor confidence; pulls down Indian bourses too

Continuing their freefall despite government measures, China's stocks tumbled sharply today as investor confidence shattered by the recent USD three trillion losses led to share-dumping to prevent further losses.

The benchmark Shanghai Composite Index sank 5.9 per cent to finish at 3,507.19 points while the Shenzhen Component Index slumped 2.94 per cent to close at 11,040.89points.

More than 1,000 shares on the two bourses dived by the daily limit of 10 per cent.

More than half of the roughly 2,800 companies listed in Shanghai and Shenzhen had suspended trading as of today to avoid further losses, state-run Xinhua news agency reported.

Yesterday a total of 203 listed companies suspended trading. All industry groups lost ground, with aviation manufacturing, medical care, internet and transportation companies plunging by the daily limit of 10 per cent, the report said.

With the benchmark Shanghai stock index falling more than 30 per cent from June peak, Chinese government has unveiled a raft of supportive measures to prop up the market, but the efforts have done little to halt the decline so far.

It also ordered an inquiry to determine the reasons into precipitous fall.

Market analysts say that the losses since last few weeks amounting to an estimated USD 3.2 trillion were unprecedented.

The wave of listed companies seeking a suspension in trading comes at a time when Chinese have been suffering considerable losses over the past several weeks, state-run Global Times reported.

On Monday, Chinese Premier Li Keqiang said in a speech that China is confident and able to deal with the risks and challenges faced by its economy.

A series of unprecedented emergency rescue measures were implemented over the weekend, such as the suspension of the IPOs of 28 companies, allowing 21 Chinese brokerages to invest 120 billion yuan (USD19.3 billion) in blue-chip exchange- traded funds (ETFs) and Central Huijin, a unit of China's sovereign wealth fund, vowing to buy A-shares.

However only a limited number of blue-chip companies were able to directly benefit from the funds.

Today the government said Chinese insurance companies will be able to invest up to 10 per cent of their assets in a single "blue chip" stock, up from the previous five per cent.

Meanwhile, the state-backed China Securities Finance Co will "increase" stock purchases of small and medium-sized companies, with liquidity support from the country's central bank.

Separately, China's state asset regulator ordered the country's centrally administered state-owned enterprises (SOEs) not to sell shares in their listed companies amid "abnormal market volatility".

Markets go haywire; stocks, rupee, gold feel China heat

Benchmark BSE Sensex today plunged 483.97 points, its biggest single-day fall in over a month, to end the day below the 28,000 mark at 27,687 on heavy selling.

The rupee lost ground, which closed at 63.60 against dollar, down 14 paise. Gold too lost some of its sheen.

Brokers attributed the sharp fall in financial markets to the sell-off in Asian bourses after a Chinese stock market rout rattled investors as the deadline looms for Greece to seal a deal with its international creditors.

The broader NSE Nifty cracked below the crucial 8,400-mark by tumbling 147.75 points to end at 8,363.05.

The 30-share BSE Sensex slipped below the 28,000-mark to settle at 27,687.72, a steep fall of 483.97 points, or 1.72 per cent, from its previous close.

This is the biggest single-session fall of the Sensex since a plunge of 661 points recorded over a month ago on June 2.

Metal stocks bore the brunt after base metals led by copper fell to multi-year lows after the China rout, stoking fears that the sell-off may trigger a broader slowdown in the world's biggest metal consumer.

In the metal segment, Vedanta, Hindalco and Tata Steel came under heavy selling.

China mainland index Shanghai Composite plunged 5.90 per cent after losing more than 8 per cent at one point. The losses came despite additional measures announced by the government to shore up the tumbling market, which has wiped off a significant amount of investors' wealth.

Similarly, Japan's Nikkei fell 3.14 per cent and Hong Kong's Hang Seng 5.84 per cent, its biggest one-day drop since October 2008.

Brent crude for August fell 13 cents to USD 56.72 per barrel.

Gold prices too declined to an over three-month low, plunging Rs 330 to Rs 26,170 per 10 grams in the national capital. A firming dollar only reduced its appeal.

Similarly, in Kolkata, gold dropped Rs 220 to Rs 26,310 per 10 grams while in Chennai, it lost Rs 200 at Rs 26,290 per 10 grams.

Globally, the bullion fell 0.7 per cent to USD 1,147.36 an ounce in London.

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