In comparison, the benchmark Shanghai Composite index finished down by a smaller 2.67%.
However, persistent doubts that China’s economic growth this year will meet the government’s official forecast of 7 percent are deterring many investors from re-entering the market.
China CSI300 stock index futures for September fell 4.5 percent, to 3,156.8, 72.96 points below the current value of the underlying index.
While the China-fuelled global volatility that has characterised much of the past month’s trading has eased off, the morning’s confidence waned as traders moved out of higher-yielding, or riskier, assets while they await a key USA interest rate decision this week. Five interest-rate cuts since November and plans to boost government spending have yet to revive an economy mired in a property slump, overcapacity and factory deflation. That helped lift shares in the region, including in Shanghai, Hong Kong and Japan, where benchmarks had been down for consecutive weeks.
“After the recent slump in equity prices it is normal that some funds have redemptions, particularly mutual funds, which are mostly sold to retail investors in the mainland”, said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co.in Shanghai.
Chinese and Hong Kong shares settled lower by midsession on Tuesday, extending losses from the previous session as the securities regulator’s assurance failed to offset mounting concerns over the gloomy outlook of the economy and timid proposals for state-owned enterprise (SOE) reform. South Korea’s Kospi gained 2%, bouncing back from its lowest level in more than two years.
“Trading will remain volatile ahead of the (Fed policy) meeting“, Bernard Aw, a strategist at IG Asia in Singapore, said. “Investors may expect more stimulus in the pipeline, which could provide some support to Chinese equities”. While a rate rise is expected by the year’s end, the global ructions unleashed by China’s devaluation last month has complicated bank policymakers’ decision.
The euro was at 136.55 yen compared with 136.64 yen, and rose to $1.1341 from $1.1333 in U.S. trade.
“Nearly all of buyers don’t anticipate a coverage change for now, however there’s a slight expectation that the financial institution will ease a while quickly”, stated Chihiro Ohta, basic supervisor at funding analysis and investor providers at SMBC Nikko Securities, including the market will scan BOJ Governor Haruhiko Kuroda’s post-meeting speech for coverage clues.
As of Friday, 39 percent or 2,094 accounts suspected of wrongdoings were yet to be cleaned up, which hold combined 187.6 billion yuan of stocks, according to China Securities Regulatory Commission (CSRC).