Chinese stocks post the worst performance in three months on the first trading day after the week-long Golden Week holiday, putting them on course for their worst performance for the same period since 2008.
The Shanghai Composite Index tumbled 3.7 per cent to 2716, the biggest drop since 19th June. The Shenzhen Component Index and the Chinext index are plunging 4 per cent.
Losses are seen across the board, led by large-cap blue-chip stocks are leading the selloff. The SSE 50 index which tracks the biggest 50 stocks listed on the Shanghai Stock Exchange plunged 4.6 per cent. Meanwhile, the CSI 300 index tracking the biggest 300 stocks listed on the two stock exchanges in Shanghai and Shenzhen slumped 4.3 per cent.
Overseas funds are fleeing from the mainland market today, with net fund outflows through the stock link between Hong Kong and the mainland hitting 9.6 billion yuan, the second highest so far this year, after 9.66 net outflows recorded in 6th February.
The selloff comes in spite of the move by the People’s Bank of China (PBOC) to cut the amount of cash lenders must hold as reserves by 1 percentage point on Sunday to release up to 750 billion additional liquidity.
However, the central bank’s move was obviously not enough to offset a barrage of negative news coming in during the week-long National Day holiday, including weak manufacturing data, a close call between a US and a Chinese destroyer, a North American trade deal that’s set to sideline China, accusations of election meddling from US Vice President Mike Pence and a Bloomberg News report that the country spied on US companies.