Chinese shares free fall to 3-month low

• Source: Global Times
• [08:29 September 01 2009]
• Comments

A Chinese man points out to an electronic board showing the index and share prices at a stock trading hall in Shanghai, China's financial hub, Aug. 31, 2009. China's benchmark Shanghai Composite Index on the Shanghai Stock Exchange closed at 2667.75 points on Monday, down over 6 percent from the previous close. (Xinhua photo)

By Qiu Wei

Chinese mainland shares dived 6.74 percent to a three-month low Monday as signs of sluggish lending growth and a glut of new share supply seemed to worsen investor anxiety.

The Shanghai Composite Index, which covers A and B shares, was down 192.94 points at 2,667.75 on turnover of 124.6 billion yuan ($18.2 billion), marking the largest daily drop for the benchmark index since June of last year. The Shenzhen Component Index also tumbled 7.55 percent, or 864.99 points, to close at 10,585.09.

The Shanghai A-share index fell 202.55 points, or 6.75 percent, to close at 2,799.48 on turnover of 124.1 billion yuan. The Shenzhen A-share index shed 73.47 points, or 7.18 percent, to 949.88 on turnover of 64.6 billion yuan.

As a result, China's fall dragged other markets lower in the region, with Hong Kong losing 1.86 percent, Sydney dipping 0.23 percent and Seoul shedding 1 percent, despite an early Tokyo rally triggered by the opposition's landslide election win in Japan.

Seven out of 10 securities analysts contacted by the Global Times forecasted further turbulence for the stock market. And seven out of 10 economists said the country's recovery was bound to happen.

Xia Huan, a businessman who started investing in stocks five years ago, told the Global Times yesterday that he has suffered a lot of heartache since early last month. I've lost as much as 40,000 yuan since early August, he said. That's equal to my annual earnings.

The stock market doesn't look hopeful, he added, likening the situation to the beginning of a bear market. If the government has plans to launch new policies to rescue the stock market, I'd be in favor of a long-term one, since policy-driven short-term prosperity won't help the health of the stock market.

Monday's dip came as new loans in August are believed to have fallen to less than 300 billion yuan, down from 355.9 billion in July and 1.53 trillion in June, the Economic Observer newspaper reported. New yuan-dominated loans registered a record low of 270 billion yuan in August last year.