Chinese stock markets suffer huge losses
China’s A-shares plunged on Monday, with the three major indexes all suffering big losses and over 1,000 stocks plummeting by the daily 10 percent cap on fears over escalating trade tensions.
The benchmark Shanghai Composite Index declined 5.58 percent, or 171.88 points, to finish at 2,906.46 points.
The smaller Shenzhen Component Index slumped 7.56 percent to end at 8,943.52 points, while the ChiNext Index, China’s Nasdaq-style board of growth enterprises, fell 7.94 percent to finish at 1,494.89 points, the biggest daily loss since China introduced a circuit-breaker mechanism in January 2016.
The combined turnover of the two bourses was 657.9 billion yuan (US$96.8billion), up from 496.5 billion yuan the previous trading day.
The market saw broad-based declines, with sectors such as communications and non-banking financial companies leading the losses.
China’s central bank announced on Monday that it will cut the required reserve ratio for rural commercial banks, effective May 15. The announcement was made just before the markets opened.
The RRR for small- and medium-sized lenders will be lowered from around 11.5 percent to 8 percent, which will inject around 280 billion yuan in liquidity into the market.
But the move did not calm investor concerns over worsening US-China trade relations as well as downward domestic economic pressure, analysts said.
Recent data from the National Bureau of Statistics showed that the country’s April manufacturing Purchasing Managers Index fell to 50.1 from 50.5 in March, below expectations. Non-manufacturing business activities cooled to 54.3 from 54.8.