The Shanghai Composite, one of China’s leading stock indexes, has seen its highest daily spike in more than two years following signs that the government will step in to support battered equity markets.
It closed up 4.1%, its biggest one-day rise since March 2016.
The moves extend a rally that began on October 19 and after investor confidence surged on assurances from Beijing.
Stocks had been falling as China’s economic growth continued to stutter.
On October 19, top Chinese financial officials – including economic adviser Liu He and the heads of the securities and insurance commissions – issued a statement to buoy investor sentiment in bruised markets.
China stock market closed down by more than 5% after several major brokerage companies announced they were under investigation.
The Shanghai Composite index ended the day 5.5% lower at 3,436.3 points – marking its biggest drop since August.
On November 26, it was announced that China’s securities regulator was investigating the country’s largest brokerage, CITIC Securities.
CITIC Securities is being probed over the possible breaking of market rules.
Rival brokerage Guosen Securities is also being investigated, and shares in both CITIC and Guosen fell by 10%, the maximum allowed in one day.
In addition, trading in China Haitong Securities shares was halted and later in the day the company also confirmed it was under investigation.
Chen Xingyu, an analyst at Phillip Securities, told the AFP news agency: “The biggest reason for such a sudden drop today is because of regulator’s investigation of the top brokers. It has triggered a broader sell-off.”
Analysts said there was little information on the specific reasons for the probes other than violations of securities regulations.
Reuters reported that the Chinese regulator was urging brokerages to stop financing investors’ stock purchases through swaps in an attempt to curb leveraged trading.
A crackdown on leveraged and margin trading has been underway since the Chinese market’s dramatic plunge over the summer.
Market sentiment was already wavering ahead of a new batch of initial public offerings set to make their debut next week.
More negative economic data on the Chinese economy also did little to boost investors’ confidence, with government figures showing that industrial profits in October fell 4.6% from a year ago.
The fifth consecutive decline in profits earned by Chinese industrial companies added more fuel to concerns over a slowdown in the world’s second-largest economy.
The Chinese markets were volatile for much of September 7 as mainland stock exchanges reopened following a four-day weekend.
The Shanghai Composite traded erratically, but closed down by 2.5% to 3,080.42 points.
The market volatility in China came as the country’s National Bureau of Statistics revised its annual economic growth rate for 2014 to 7.3%, down from 7.4%.
Hong Kong’s benchmark Hang Seng index closed down 1.2% to 20,583.52.
Mainland shares have fallen 40% since mid-June when the sell-off began, while Chinese regulators continue to take more steps to stabilize erratic trading.
China’s central bank governor, Zhou Xiochuan, told financial leaders at the G20 summit over the weekend that the markets had almost completed their correction after a steep rise in the first half of the year.
Photo Getty Images
“The stock market adjustment is already roughly in place and financial markets can be expected to be more stable,” Zhou Xiochuan said in a statement from Turkey.
Other Asian markets were mixed on September 7 despite stocks in the US, which headed lower on before weekend after US jobs figures were released.
Friday’s much-anticipated jobs figures showed unemployment fell to 5.1% last month, the lowest since April 2008.
The jobs report is the last before the Federal Reserve meets later this month to decide whether to increase interest rates.
Japan’s benchmark Nikkei opened lower on September 7, down 0.65%, but finished the day closing up 0.38% at 17,860.47.
In Australia the S&P/ASX 200 closed down 0.2% at 5,030.40, while South Korea’s Kospi benchmark index closed down 0.15% at 1,883.22 points, after closing down 1.5% on September 4.
China stock market has plunged for a second day after worries over the country’s slowing growth triggered a global sell-off.
The Shanghai Composite, China’s main stock exchange, fell 7.6% on August 25 – after losing 8.5% on what state media have called China’s “Black Monday” on August 24.
It was the worst fall since 2007 and caused sharp drops in markets in the US and Europe.
Tokyo’s Nikkei index had a volatile day, closing 4% lower.
The Shanghai index ended the day 245 points lower at 2,964.97.
After decades of rapid growth, China is slowing down, and investors globally are worried that firms and countries which rely on high demand from China – the world’s second largest economy and the second largest importer of both goods and commercial services – will be affected.
Chinese shares had experienced a year-long rally – mainly fuelled by investors borrowing money to buy shares – which came to an end in June.
The government then intervened in financial markets, to try to maintain momentum in the economy.
Two weeks ago China’s central bank devalued the currency, the yuan – this raised fresh concerns that China’s economy could be in worse shape than previously thought.
A cheaper currency lowers the price of China’s exports, making them more attractive to global companies.
Elsewhere in Asia and Australia on August 25, markets beat expectations, opening lower but then returning back to positive territory: Korea’s KOSPI gained almost 1% and Australia’s S&P ASX/200 ended the day 2.7% higher.
The dollar remained weak at 119.15 yen, up from a seven month low of 118.51 yen in New York on August 24.
Commodity prices also recovered after Monday’s falls, although oil remains under pressure because of a global oversupply.
Overnight, the Europe and the US saw dramatic falls, but are expected to show some signs of recovery when they open on August 25.
Wall Street’s Dow Jones fell 6%, but then almost recovered its losses before closing 3.6% lower.
London’s FTSE 100 index closed down 4.6% as major markets in France and Germany were down by 5.5% and 4.96% respectively.
Chinese shares have recorded their biggest one-day fall for more than eight years following a sell-off towards the end of the trading day.
The Shanghai Composite closed down 8.5% at 3,725.56 after more weak economic data raised concerns about the health of world’s second largest economy.
Profit at China’s industrial companies dropped 0.3% in June from a year ago.
That followed data on July 24 indicating that factory activity in July seen its worse performance for 15 months.
The Shanghai market’s fall was the biggest one-day loss since February 2007.
Photo Getty Images
While there was little to explain why shares were being sold at such a level, analysts said fears that China might hold off from further measures to boost the economy had contributed to concerns among investors.
The stock market has been benefitting from a series of support measures from the government and regulators after it lost a third of its value in the three weeks from mid-June.
Since late June, Chinese authorities have cut interest rates, suspended initial public offerings, eased margin-lending and pushed brokerages to buy stocks, backed by money from the central bank.
Chinese shares had recovered about 15% of their value before today’s plunge – showing some signs of stabilization.
On July 27 stocks fell across the board, including benchmark index heavyweights such as China Unicom, Bank of Communications and PetroChina.
More than 1,500 shares listed in Shanghai and Shenzhen fell by their daily downward limit of 10%.
Elsewhere in Asia, Hong Kong’s Hang Seng index closed down 3.1% at 24,351.96 – its biggest loss in three weeks.
Japan’s benchmark Nikkei 225 index fell 1% to 20,350.10, while South Korea’s Kospi index finished 0.4% lower at 2,038.81.
Australian stocks bucked the downward trend, closing up 0.3% at 5,582.40.