Bloomberg China’s benchmark stock index fell to a three-month low on concern a raft of measures to stabilize equities is failing to stop the bear-market rout as traders unwind margin bets at a record pace.
'The Shanghai Composite Index slid 3.9 percent to 3,582.50 at the
11:30 a.m. break, after plunging as much as 8.2 percent, the most since
2007. Power, health-care and consumer companies led declines, as only 14
stocks among the 1,106 that trade in Shanghai rose. PetroChina Co. and
Industrial & Commercial Bank of China Ltd., the two biggest stocks,
lost more than 3 percent.
'The latest attempts to stem declines, which include a wave of Chinese
companies halting trading in their shares and regulators unveiling
measures to prop up the value of small-cap stocks, have so far failed to
convince investors that valuations are cheap enough after a 28 percent
drop in the Shanghai Composite from this year’s high on June 12. The
measures follow stock purchases by state-directed funds and
interest-rate cuts by the central bank in recent weeks.
'“Greed and fear,” said Michael Every, head of financial markets
research at Rabobank Group in Hong Kong. “If you hadn’t been greedy you
have nothing to fear now. We are heading to 2,500.”
'The CSI 300 dropped 4.8 percent. Hong Kong’s Hang Seng China
Enterprises Index, which entered a bear market Tuesday, fell 5.2 percent
at 11:55 a.m., dragged down by losses for banks and brokerages. The
Hang Seng Index dropped 4.2 percent.
'Traders cut 98.3 billion yuan ($15.8 billion) worth of shareholdings
purchased with borrowed money on the Shanghai exchange on Tuesday, an
8.5 percent drop from the previous day that’s the biggest on record. A
five-fold surge in leveraged wagers had helped propel the Shanghai index
to a more than 150 percent gain in the 12 months through June 12.'