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Like US markets before them, Chinese stocks have been hammered on Friday, falling heavily to fresh multi-month lows.
And, like the Dow Jones Industrial Average and S&P 500, they’ve also experienced a technical correction, defined as a decline of 10% or more from an indexes recent peak.
The markets have paused now for the mid-session break, but the price action earlier today was just plain ugly.
The benchmark Shanghai Composite Index closed the morning session down 4.1%, extending its losses from the recent highs to over 12.8%.
The losses were led by the telecoms sector which plummeted by 7%, followed closely by energy and financials which are both down more than 5%. Materials, industrials and consumer staples have also lost more than 3%.
No sector is in positive territory with technology the best performer with a decline of only 1.9%.
A rough start to the day, and one that some analysts think will continue for some time yet.
“We are still in the depth of market volatility as sentiment was hurt by the double whammy of US market turmoil and deleveraging efforts at home,” Wu Kan, a Shanghai-based fund manager at Shanshan Finance, told Bloomberg. “Risk appetite has dropped sharply and I don’t think the situation will get any better before the Chinese New Year holiday.”
The SSE 50 — comprising large cap stocks listed in Shanghai — fell even more than the benchmark, closing morning trade down 5.4%. At one point it slumped by as much as 7.5%.
It’s also fallen 12.9% from January’s high, leaving it a technical correction.
The CSI 300 — made up of large cap stocks listed in Shanghai and Shenzhen — also closed deep in negative territory, nursing a loss of 4.43%
Other markets aligned to small caps and tech stocks were also under pressure, just not to the same degree as the carnage seen in large caps.
The CSI 500, Shenzhen Composite and tech-heavy ChiNext Index closed the morning session down 2.9%, 2.60% and 1.69% respectively.
They have also entered a technical correction, only earlier in the week.
The sharp plunge followed another ugly performance from US stocks which fell heavily into the close, mirroring the price action seen on Monday.
The Dow Jones Industrial Average skidded 1,032 points, or 4.15%, closing at 23,860 points. The S&P 500 and Nasdaq also fell with a thud, losing 3.75% and 3.9% respectively.
As seen in the scoreboard below as at 2.40pm AEDT, while China is leading the losses, it’s been an ugly session for all major markets across Asia.
Australia ASX 200 5831.30 , -1.01%
NZ NZX 50 8099.07 , -0.96%
Japan TOPIX 1722.10 , -2.47%
Shanghai Comp 3127.92 , -4.11%
Shenzhen Comp 1689.21 , -2.62%
HK Hang Seng 29365.06 , -3.57%
Sth Korea KOSPI 2364.80 , -1.78%
Sinagpore STI 3361.61 , -1.59%
Taiwan TAIEX 10353.76 , -1.66%
Philippines PSI 8489.12 , -1.80%
Indonesia JKSE 6480.26 , -0.98%
Malaysia KLCI Index 1817.94 , -1.17%
Thailand SET 1776.1 , -0.59%
S&P 500 Futures 2601.5 , 0.31%
