Chinese stocks slumped, extending the steepest rout since 2007, on concern the government is paring back support for the market.
The Shanghai Composite Index tumbled 5.8 percent to 3,029.80 at 9:31 a.m. local time, heading for the lowest close in eight months. The gauge tumbled 8.5 percent on Monday, following last week’s 12 percent decline.
Unprecedented government intervention has failed to stop a $ 4.5 trillion rout since the market peaked in June amid growing concern the slowdown in the world’s second-largest economy is deepening. The central bank added the most funds to the financial system in open-market operations since January 2014 on Tuesday as currency-market intervention to prop up the yuan strained the supply of cash.
Source : Bloomberg
Asian stocks rose, led by a jump in Chinese shares amid speculation the government will accelerate mergers among state-owned enterprises. Japan’s Topix index climbed to the highest close since July 2007.
The Shanghai Composite Index advanced 4.9 percent, with 78 stocks, including China Shipbuilding Industry Co. and China United Network Communications Ltd., surging by the 10 percent daily limit. China may combine China Shipping Group and Cosco Group, its two major shipping companies, according to people familiar with the matter. Nissin Foods Holdings Co. gained 5.9 percent in Tokyo after profit rose 35 percent.
The MSCI Asia Pacific Index advanced 0.3 percent to 141.46 as of 4:01 p.m. in Hong Kong. The Shanghai gauge has climbed 7.2 percent this month as authorities took unprecedented steps to shore up markets, including banning stake disposals by major shareholders, suspending initial public offerings and requiring state-run institutions to support the market with equity purchases.
The Chinese government may combine China Shipping and Cosco or merge some of their operations, according to the people, who asked not to be identified because the deliberations aren’t public. The two companies’ listed units including China Shipping Development Co. and China Cosco Holdings Co. were suspended from trading on Monday.