China stocks close down 6.5% on liquidity worries
The benchmark Shanghai Composite Index slumped 321.44 points to 4,620.27 on record turnover of $196 billion
Shanghai: Chinese stocks plunged 6.5% on Thursday on concerns over tight liquidity and stricter requirements for margin trading, dealers said.
The benchmark Shanghai Composite Index slumped 321.44 points to 4,620.27 on record turnover of 1.2 trillion yuan ($196 billion).
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, tumbled 5.52%, or 161.09 points, to 2,756.93 on turnover of 1.1 trillion yuan.
“Tighter margin lending and an upcoming big week for IPOs (initial public offerings) constrained some liquidity," Clement Cheng, a Hong Kong-based trader at RBC Investment Management, told Bloomberg News.
Analysts said market sentiment was also hurt after several securities firms raised the deposit level for margin trading — through which investors use borrowed funds to trade stocks.
“The market slump today is triggered by concerns over tight market liquidity from new share issues next week," Zheshang Securities analyst Zhang Yanbing told AFP.
A total of 23 companies will issue new shares for investor subscription next week, including China National Nuclear Power, draining funds from the rest of the market.
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