Chinese shares slump as start-ups nosedive

2014-09-17 08:09 Xinhua Web Editor: Qin Dexing

An investor reads stock information at a trading hall of a securities firm in Fuyang City, east China's Anhui Province, Sept. 16, 2014. (Xinhua/Lu Qijian)

Chinese stocks suffered their worst fall since March of this year on Tuesday as shares of growth enterprises plunged.

The benchmark Shanghai Composite Index shed 42.59 points, or 1.82 percent, to finish at 2,296.55 points, just below the psychological line of 2,300 points. The index reported its highest closing since March 6, 2013 on Monday.

The smaller Shenzhen Component Index lost 191.57 points, or 2.36 percent, to close at 7,921.07 points. Combined turnover of the two bourses stood at 499.4 billion yuan (83.18 billion U.S. dollars), a new high this year.

The ChiNext Composite Index, tracking China's Nasdaq-style board of growth enterprises, plunged 3.47 percent to close at 1,473.13 points. It closed at a record high of 1,526.13 points on Monday.

Leading losers of the day were firms in the defense industry, aviation, shipbuilding, media and entertainment.

Weak economic data, investors' profit-taking and 11 new initial public offerings approved by the country's securities regulator have been blamed for Tuesday's plunge.

Official figures showed that China's industrial output growth, which is one of the best leading indicators for GDP growth, stood at 6.9 percent in August, its weakest rate since December 2008.

Tuesday's slump dealt a heavy blow to market sentiment, which had improved significantly in recent weeks as analysts and investors talked of a bull run.

One of these analysts, Ai Tangming, a Beijing-based stock market analyst, downplayed the misery.

Tuesday's market pattern was technically ugly given the huge turnover and plunge, but it was just a normal fall and didn't indicate a market turnaround, he said.

Plunges in a bullish market are not as bad as endless falls in a bearish market, Ai said.

Chinese shares, which have been bearish for years, have continued to rise since the end of July.

By closing on Monday, the benchmark Shanghai Composite Index had gained 284.64 points, or 13.9 percent, from the closing on July 21, which stood at 2,054.5 points.