[Yesterday, the precious Dow dropped 1000 points when it opened, after the Chinese market dropped by 7%. Look for a similar drop when it opens again this morning, after China falls another 7 (SEE: Dow drops 1000 points, US stocks plummet at open ).]
China Stocks Plummet Another 7 Percent Amid ‘Mood of Panic’
The CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 7.1 percent, while the Shanghai Composite Index collapsed 7.6 percent to close below the psychologically significant 3,000-point level.
Underscoring the panic gripping the retail investors who dominate China’s stock markets, all index futures contracts fell by the maximum 10 percent daily limit, pointing to expectations of even deeper losses.
After the turmoil in China rocked world equity and commodity markets on Monday, policymakers elsewhere in Asia sought to soothe fears about the broader impact on the global economy.
“I think it’s important that people don’t hyperventilate about these type of things,” said Australian Prime Minister Tony Abbott, whose country is heavily exposed to China, the biggest consumer of its commodity exports. “It is not unusual to see stock market corrections. It is not unusual to see bubbles burst in particular markets and for there to be some flow-on effect in other stock markets, but the fundamentals are sound.”
Japanese Finance Minister Taro Aso also said Chinese stocks, which had more than doubled in the six months to May, had been a bubble that was now bursting.
“There’s also suspicion on whether China’s official GDP figures reflect the real state of the economy,” he told a news conference after a cabinet meeting in Tokyo.
After a year of heady gains, Chinese markets have been buffeted by increasing signs that economic growth is faltering.
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