Chinese stocks tumbled, sending the benchmark index into a bear market, as signs of an exodus by leveraged investors overshadowed the central bank’s effort to revive confidence with an interest-rate cut.
The Shanghai Composite Index dropped 3.3 percent to 4,053.03 at the close, taking declines from its June 12 peak to more than 20 percent. The gauge swung between a loss of 7.6 percent and a gain of 2.5 percent in Monday trading, recording the biggest intraday point move since 1992. A measure of technology stocks sank 7.3 percent to lead declines among industry groups.
The retreat marks an end to the nation’s longest-ever bull market, a rally that’s lured record numbers of individual investors and convinced traders to bet an unprecedented amount of borrowed money on further gains. China’s interest-rate cut, along with assurances from the securities regulator that risks from margin trading are controllable, failed to ease concern that speculators are unwinding their positions.
“Nobody knows when the market will bottom,” said Paul Chan, the Hong Kong-based chief investment officer for Asia ex-Japan at Invesco Ltd. “The unwinding of margin financing makes it very difficult to forecast what the fair valuation is.”
The losses spread to Hong Kong, with the benchmark Hang Seng Index sinking 2.6 percent, while Hong Kong’s Hang Seng China Enterprises Index slid 3 percent.
