World Economy

Biggest Drop in China Shares Since 2007

Biggest Drop in China Shares Since 2007Biggest Drop in China Shares Since 2007

Chinese shares slid more than 8% on Monday as an unprecedented government rescue plan to prop up valuations ran out of steam, throwing Beijing’s efforts to stave off a deeper crash into doubt.

Major indexes suffered their largest one-day drop since 2007, shattering three weeks of relative calm in China’s volatile stock markets since Beijing unleashed a barrage of support measures to arrest a slump that started in mid-June, Reuters reported.

“The lesson from China’s last equity bubble is that, once sentiment has soured, policy interventions aimed at shoring up prices have only a short-lived effect,” wrote Capital Economics in a research note reacting to the slide.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen tumbled 8.6% to 3,818.73 points, while the Shanghai Composite Index lost 8.5% to 3,725.56 points.

China’s market fluctuation has stoked fears among global investors about the broader health of the world’s second biggest economy, hitting prices of growth-sensitive commodities such as copper, which fell on Monday to not far from a 6-year low.

Stocks fell across the board on Monday, with 2,247 companies falling, leaving only 77 gainers. More than 1,500 shares listed in Shanghai and Shenzhen dived by their 10% daily limit, led by index heavyweights including China Unicom, Bank of Communications and PetroChina.

All traded index futures contracts also fell by their maximum 10% limit, with the exception of a few tracking the large cap SSE50 index, which declined around 9%. Monday’s fall accelerated sharply in the afternoon, long after investors had digested lackluster data on profits at Chinese industrial firms and a disappointing private factory sector survey on Friday.