China stocks plunge again

China's bluechip Shanghai Composite Index dropped another 5.9 percent on Wednesday, while the broader CSI300 index of the largest firms in Shanghai and Shenzhen fell 6.8 percent.

In a sign that investors outside mainland China are getting nervous about the stock market slump in the world's second-biggest economy, Hong Kong's Hang Seng Index also fell, by 5.84 percent to 23,516 - its lowest close since the start of January. It was also the largest fall since November 2008.

There were also losses in other parts of Asia on indices that list shares of companies with links to China. Tokyo's Nikkei sank 3.14 percent, South Korean shares slipped 1.18 percent, and stocks in Sydney retreated 2 percent.

"I've never seen this kind of slump before. I don't think anyone has. Liquidity is totally depleted," Du Changchun, an analyst at Northeast Securities, told the Reuters news agency.

More than 500 China-listed firms asked to have their shares suspended on the Shanghai and Shenzhen exchanges on Wednesday, taking total suspensions to about 1,300, or 45 percent of the market, amounting to roughly $2.4 trillion worth of stock.

Government measures aimed at stemming the slide that began in mid-June have failed to inspire confidence. On Wednesday, the central bank said it would provide sufficient liquidity, support stability in the stock market and guard against systemic and regional financial risks.

At the weekend, the government announced a curb on initial public offerings (IPOs) and orchestrated brokerages and fund managers to promise to buy at least 120 billion yuan ($19.3 billion) of stocks to prop up the markets.

At the end of June, the central bank cut interest rates, the government announced relaxations in margin trading and other stability measures - all to little effect.

The plunge in China's previously booming stock markets is a major headache for President Xi Jinping, who had hoped to foster a more liberal approach to markets as part of his economic reform agenda.

But China's slowing growth, paired with a stock market that is dominated, and thus made more volatile, by retail investors is working against the government's efforts to calm the markets.

ng/jil (Reuters, AFP)