The Shanghai gauge dropped 1.1 percent to 2,651.79, below its January 2016 bottom. Back then, officials had just introduced and then
hastily scrapped a disastrous circuit-breaker program as they grappled
with one of the market’s worst-ever routs.
Trade tensions with the US are exacerbating investor concern. With President Donald Trump telling aides to proceed with additional tariffs
on Chinese products, the Chinese government is considering declining an
offer of talks, according to a Wall Street Journal report, which cited
officials with knowledge of the discussions.It’s hard to buy Chinese
stocks even if they sell down" given the trade war and weak company
fundamentals, said Toshihiko Takamoto, a Singapore-based money manager
at Asset Management One. "Even if the valuation gets cheaper, there’s a
reason for that. It’s hard to find factors that would spark a sharp
rebound."
A weaker yuan also makes the nation’s shares less attractive. China’s currency has fallen almost 7 percent since the end of March amid
speculation the government was trying to counter the impact of U.S.
tariffs.This year’s hefty declines -- the Shanghai gauge is down 20
percent in 2018 -- ends a period of relative stability for the stock
market that began with the appointment of Liu Shiyu as the top
securities regulator in early 2016 after his predecessor Xiao Gang was
blamed for the crash. Under Liu, the stock index climbed 32 percent from
the end of February 2016 though its high in January this year.
The latest plunge in Chinese equities will likely increase the appeal of other speculative assets such as property, undermining the
government’s efforts to make the stock market a steady base for
companies to raise funds.
