Chinese shares plunge as growth fears rise

Chinese have plunged into red territory for the first time this year as growth-related fears continue to shake world financial markets.

The Shanghai Composite is down 8.4% in today’s trading, bringing its losses since its mid-June peak to roughly 37% and wiping out all the gains this year.

At its peak, the index was up nearly 60% for the year, having doubled in value over the 12 months.

The drop follows steep declines in US and European sharemarkets at the end of last week. They are now in correction mode after falling more than 10% from their recent peaks.

Investors are worried by slowing growth in China, which has sent commodity prices reeling and battered emerging market currencies.

Benchmark share indexes have also fallen in in Japan and Australia.

China devalued its yuan two weeks ago in a move some see as an attempt to boost exports, while recent economic data point to a slowdown that is greater than many have expected.

Meanwhile, the Wall Street Journal has reported China’s central bank is preparing to flood the banking system with liquidity to boost lending.

Hong Kong’s Hang Seng Index is down 3.6% today after slipping into bear-market territory last week, defined as a drop of more than 20% from a recent high.

Taiwan’s Taiex, Asia’s worst performing stock index year-to-date – having shed 21% in that period – fell 5.9%.

China’s expected move to inject more liquidity into the system – which could come before the end of this month or early next month – would involve a half-percentage-point reduction in the reserve-requirement ratio, which measures the amount of deposits banks are required to hold. That would potentially release 678 billion yuan ($106.2 billion) in funds for banks to make loans.

US oil futures have fallen to under $US40 a barrel for the first time since 2009 while Brent, the international benchmark, is at $US44.62 barrel, down 21% this year.

Gold is steady at $US1159.80 an ounce in Asia, after hitting seven-week highs last week.

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