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Chinese shares drop in dramatic free-fall | |
(about 1 hour later) | |
Chinese shares continued their sharp fall on Monday as concerns over the country's slowing growth and volatile markets sparked panic among traders. | |
The mainland benchmark index, the Shanghai Composite, fell sharply by 8.4% to 3,211.75 points, extending last week's sharp losses. | |
The sell-off continued despite China's latest attempts to reassure investors. | |
Over the weekend, Beijing said it planned to let its main state pension fund invest in the stock market. | |
Under the new rules, the fund will be allowed to invest up to 30% of its net assets in domestically-listed shares. | Under the new rules, the fund will be allowed to invest up to 30% of its net assets in domestically-listed shares. |
The fund will be allowed to invest not just in shares but in a range of market instruments, including derivatives. By increasing demand for them, the government hopes prices will rise. | The fund will be allowed to invest not just in shares but in a range of market instruments, including derivatives. By increasing demand for them, the government hopes prices will rise. |
The Hong Kong Hang Seng index followed the mainland's sharp decline, dropping 4% to 21,523.57 points in early trade. | |
A 'one-trick pony'? | A 'one-trick pony'? |
Simon Littlewood, president at business advisory firm ACG Global told the BBC there were concerns that the world's second biggest economy was "a one-trick pony as they have been trying repeatedly over the past few months to put more liquidity into their economy", yet so far have failed to calm markets. | Simon Littlewood, president at business advisory firm ACG Global told the BBC there were concerns that the world's second biggest economy was "a one-trick pony as they have been trying repeatedly over the past few months to put more liquidity into their economy", yet so far have failed to calm markets. |
Over the past week, China's benchmark Shanghai Composite fell 12%, adding up to a 30% drop since the middle of June. | Over the past week, China's benchmark Shanghai Composite fell 12%, adding up to a 30% drop since the middle of June. |
The sharp fall sparked a global sell-off, with the Dow Jones in the US losing 6%, while the UK's FTSE 100 posted its biggest weekly loss this year of 5%. | |
Earlier this month, the Chinese central bank devalued the yuan in an attempt to boost exports. | Earlier this month, the Chinese central bank devalued the yuan in an attempt to boost exports. |
Elsewhere in Asia, the region's biggest stock market, Japan's Nikkei 225 traded 2.8% lower at 18,907.39 points in Monday morning trade. | |
It marks the Nikkei's lowest level in nearly five months. | |
In Australia, the S&P/ASX 200 was down by 2.9% to 5,063.50 points. | |
Iron ore miner Fortescue posted an 88% drop in annual net profit as the sector was hit by a global drop in commodity prices. Fortescue shares were down by more than 10% on the weak results. | |
In South Korea, the Kospi index followed the region's lead, trading 1.4% lower at 1,850.56 points. | |
Earlier on Monday, stock markets in the Middle East also fell sharply. | Earlier on Monday, stock markets in the Middle East also fell sharply. |
IMF: 'No crisis' | IMF: 'No crisis' |
Over the weekend, the International Monetary Fund weighed in on the global sell-off in an attempt to avoid further market panic. | Over the weekend, the International Monetary Fund weighed in on the global sell-off in an attempt to avoid further market panic. |
China's economic slowdown and fall in equities was not a crisis but a "necessary" adjustment for the economy, a senior IMF official said on Sunday. | China's economic slowdown and fall in equities was not a crisis but a "necessary" adjustment for the economy, a senior IMF official said on Sunday. |
"It's totally premature to speak of a crisis in China", Carlo Cottarelli, IMF executive director representing countries such as Italy and Greece on its board, told a press conference, reiterating the international lender's forecast for a 6.8% expansion of the Chinese economy this year, below the 7.4% growth achieved in 2014. | "It's totally premature to speak of a crisis in China", Carlo Cottarelli, IMF executive director representing countries such as Italy and Greece on its board, told a press conference, reiterating the international lender's forecast for a 6.8% expansion of the Chinese economy this year, below the 7.4% growth achieved in 2014. |
On Friday, figures showed China's factory activity in August shrank at its fastest pace in more than six years. | On Friday, figures showed China's factory activity in August shrank at its fastest pace in more than six years. |
This came after official figures showed the country's economic growth continuing to slow. For the three months to the end of July, the economy grew by 7% compared with a year earlier - its slowest pace since 2009. | This came after official figures showed the country's economic growth continuing to slow. For the three months to the end of July, the economy grew by 7% compared with a year earlier - its slowest pace since 2009. |