The benchmark Shanghai Composite Index fell 8.5 percent, its biggest one-day loss since February 2007.
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.
In Hong Kong, the Hang Seng index tracked the sluggishness in its mainland peers to fall 3.3 percent at the start of trade, with heavyweights such as HSBC and China Mobile losing more than 3 percent each. Losses appeared limited only by China’s emergency brake that limits individual shares from declining over 10 percent in a single day, and by the fact that a substantial number of stocks remain suspended from trading. Fresh evidence of the slowdown in China’s economy sparked a wave of selling Friday in Europe and the U.S. that culminated with the S&P 500 losing almost 6 percent for the week in its worst weekly slump since 2011.
It is now trading at the lowest level since mid-March, and has wiped out all of this year’s gains. “The market is in a downtrend”.
A Caixin/Markit PMI survey on Friday showed Chinese manufacturing activity shrank at the fastest pace since 2009.
Qi added: “With no RRR (reserve requirement) cut over the weekend, the market will directly head south”.
“The momentum is still very much down, so even if RSI indicates oversold conditions it’s hard to fight the trend”, said Bernard Aw, a Singapore-based strategist at IG Ltd. “If your investment horizon is longer term, 12-24 months, then there is more possibility of a rebound but you have to be prepared to stomach the volatility”.
Asia markets opened under heavy pressure on Monday, following the steep retreat in the U.S.to end last week. Weaker demand is spilling over into other markets, especially resource-dependent emerging economies that export to China.
The rand struggled at 14-year lows while the Turkish lira – its plight exacerbated by domestic political developments – languished near a record low. For some, the speed of their currency’s fall appeared to have prompted an intervention.
Though its decline was not as grave, the greenback additionally suffered towards key friends just like the euro and yen as global progress worries undermined wagers that the Fed will increase charges in September. It was last 121.05 yen having gone as low as 120.73 in Asia, a level last seen on July 9.
Equities worldwide have lost more than $5 trillion in value since China devalued its yuan.
The U.S. foreign money got here underneath further strain as Treasury yields prolonged their decline on security shopping for amid the slide in equities. The euro soared to a six-and-a-half month high of $1.1496. The benchmark 10-year Treasury note yield touched a four-month low below 2 percent.