Chinese shares plunged more than 6 percent to 14-month lows on Tuesday after oil prices dropped again, reviving concerns about global growth and prompting a sell-off in the world’s equity markets.
Battered by a late selling frenzy, the benchmark Shanghai Composite Index .SSEC ended down 6.4 percent at 2749.79 points, its lowest close since Dec. 1, 2014.
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen dropped 6 percent to 2940.51, also its lowest since the beginning of December 2014.
After a rebound on Friday and early Monday, crude prices fell back below $30 a barrel, not far from last week’s 12-year lows, ending a couple of days of gains for Wall Street stocks.
China’s fickle stock markets have now slumped about 22 percent so far this year on concerns about the slowing economy and confusion over the central bank’s foreign exchange policy.
Many investors have lost the stomach for the market after a wild ride since last summer, when shares crashed 40 percent. Beijing intervened to stem that rout and orchestrate a recovery of sorts, but anyone who mistook that for a bottom and bought in will have lost their shirt again in January.
“We’ve seen another stampede driven by panic,” said Yang Hai, analyst at Kaiyuan Securities.
“There’s no good news in sight，while investors are being affected by the global ‘risk-off’ mood.”
The slump has triggered a lot of forced liquidation, he added.
Indeed, China’s outstanding margin loans – money investors borrow to buy stocks – declined for 16 consecutive sessions to Jan. 22, the longest losing streak on record, with 209 billion yuan ($32 billion) worth of leveraged bets unwound during the period.
“Volume is getting very thin, as there are hardly any fresh inflows, and the process of deleveraging is continuing,” said Chang Chengwei, analyst at brokerage Hengtai Futures.
Wang Baoan, chief of the National Bureau of Statistics, sounded a solitary voice of confidence in the market, while trying to reassure investors that the volatility would have a limited impact on the real economy.
Wang also reiterated Beijing’s line that there was no basis for further yuan depreciation given China’s economic fundamentals.
“China’s economy will be supported by urbanisation, consumption and other positive factors,” he said