NewChinese shares sink in rout to worst single day loss in a month as new listings, tighter regulation deflates market

Panic selling swept through Chinese markets on Monday with Shanghai A-shares suffering its largest single day loss in a month while B-shares slid by 8 per cent in the last trading week of 2015.

Brokers blamed a combination of reasons behind the pounding endured by the markets ranging from the expected flood of new listings next month, a tightening of regulations in forex trading related to B-shares used by foreign investors and Chinese with forex holdings, and the poor economic data which prompted punters to dump stocks ahead of the New Year holiday this Friday. All markets in China and Hong Kong are shut for New Year, reopening for business on January 4.

The Shanghai Composite Index dropped 2.6 per cent, or 94.13 points, to close at 3,533.78, while the CSI 300 which tracks large caps in Shanghai and Shenzhen also declined 2.88 per cent, or 110.57 points, to end at 3,727.63.

The Shenzhen Composite Index lost 2.18 per cent to finish at 2,308.38.

In Hong Kong, the Hang Seng Index was down 0.99 per cent at 21,919.62 while the Hang Seng China Enterprises Index, also called the H-shares index which track Chinese enterprises listed in Hong Kong, slumped 1.65 per cent to 9,789.46.

The biggest fall came in the Shanghai B-shares Index which settled 8 per cent weaker to close at 407 in the afternoon, after hitting a six month high in the morning. The index had risen 70 per cent in the past three months. The Shenzhen B-shares Index also fell 4.9 per cent on Monday to close at 1,280.

“The B-shares market has risen substantially over the past three months and the speculation on the new policy led to a panic selling, which dragged down A-share markets in Shanghai and Shenzhen as well as the H-shares in Hong Kong,” said Louis Tse Ming-kwong, director of VC Brokerage.