Alarm bells rang across world markets on Monday as a 9 percent dive in Chinese shares and a sharp drop in the dollar and major commodities panicked investors.
The Chinese stock markets had their worst day in eight years with the benchmark Shanghai Composite Index closing at 3209.91 points. This is the steepest dive since Feb. 27, 2007, and comes less than a month after a similar plunge on July 27 this year, when the stock market lost 8.48 percent.
The loss came one day after China approved the state pension fund to invest in the stock market, which analysts said should boost the market.
Monday’s sharp decline almost wiped out all of this year’s gains, despite government intervention, such as pouring in funds and restricting sell-offs.
“Markets are panicking. Things are starting look like the Asian financial crisis of the late 1990s. Speculators are selling assets that seem the most vulnerable,” Takako Masai, the head of research at Shinsei Bank in Tokyo, told Reuters.
European stocks opened more than 3 percent in the red after their Asian counterparts slumped to 3-year lows as a 3-month long rout in Chinese equities threatened to get out of hand.
Safe-haven government bonds, the yen and the euro rallied as widespread fears of a China-led global economic slowdown and currency war kicked in. With serious doubts now emerging about the likelihood of a U.S. interest rate rise this year, the dollar slid against other major currencies.
Hong Kong stocks fell for the seventh day in a row, with key indexes slumping more than 5 percent amid global market turbulence and deepening worries about the Chinese economy.
The Australian dollar fell to six-year lows and many emerging market currencies plunged, while Russia’s rouble dropped below 71 to the dollar on Monday close to all-time lows.
Weak economic data also dampened investor confidence. The Caixin flash China general manufacturing PMI retreated to 47.1 in August, the lowest reading since March 2009.
The flash index is the earliest available indicator of manufacturing sector conditions in China. The continuous fall in the index in recent months indicates that the economy is still bottoming out, said He Fan, chief economist at Caixin Insight Group.
As the market continues to struggle, speculation is rife over whether the central bank will cut the reserve requirement ratio (RRR) again. The China International Capital Corp. predicted that the central bank will “aggressively lower RRR” by at least another 150 basis points by the end of this year.
On Monday, the Shenzhen Component Index fell 7.83 percent to close at 10,970.29 points. The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, lost 8.08 percent to end at 2,152.61 points.
Compiled from Xinhua, CCTV, Reuters, and AP.
Asian stocks tumble to 3-year low on Monday
The mainland benchmark Shanghai Composite Index fell 8.5%. Markets from Japan to South Korea also were hit hard. Analysts attribute the poor performance to market concerns over the global economy and said that stocks were weighed down by fears of an economic slowdown around the world.
CCTV’s Wang Yiqian filed this report.
Asian stocks tumble to 3-year low on MondayAsian stocks dived to 3-year lows on Monday. The mainland benchmark Shanghai Composite Index fell 8.5%. Bourses from Japan to South Korea also hit hard. Japan's Nikkei dropped 4.6%, while South Korea's KOSPI lost 2.5%. Meanwhile, Hong Kong's Hang Seng Index fell by over 5%, while Australian shares also declined to their lowest level in one and a half years, the steepest percentage drop since September 2011.Analysts attribute the poor performance to market concerns over the global economy and said that stocks were weighed down by fears of an economic slowdown around the world, as CCTV's Wang Yiqian filed the report from China.
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U.S. markets tumble after major global shakeup
Stomach churning, gut wrenching, panicked were the sentiments felt while selling took place Monday on the U.S. stock exchanges as the U.S. followed global markets in a collective tumble. The trigger was China’s stock market crash on Monday, as investors fretted over a slowdown in the world’s second-largest economy.
CCTV’s Liling Tan filed this report.