China’s high-flying stock index falls more than 4 per cent in its biggest drop in five months
- Brokerages issue sell ratings on two Chinese stocks, triggering fears broader China markets are overpriced
- Concerns about global growth mount, hurting sentiment in China and Hong Kong
China’s high-flying Shanghai shares plunged 4.4 per cent on Friday – their biggest drop in five months – after brokerages issued sell ratings on two hot stocks, triggering worries about the strength of the world’s best-performing major market.
It was quite a dramatic slamming of the brakes.
The Shanghai Composite Index had run up eight weeks of consecutive gains, gone into a bull market in just 32 days, broken through a key resistance level -- 3,000 -- that had been there since June, and gotten a string of bullish calls as foreign money has poured in.
With Friday’s loss at 4.4 per cent, the Shanghai index closed at 2,969.86. Year-to-date gains fell back to 19 per cent.
“The market is worrying about a slowdown on the economy and, as the mainland market is up a lot, the government is going to slow down the speculation,” said Kenny Tang Sing-hing, chief executive of China Hong Kong Capital Asset Management, referring to the sell ratings issued by brokerages.
The CSI 300 of large caps dropped 3.97 per cent, to 3,657.58.