China’s main Shanghai Composite Index and the CSI300 both plunged by over 2% on Friday morning, making Chinese shares fall by over 10% from their highs and entering correction territory. The decline marks the first drop of over 10% since January of last year.
Investors sold stocks as Beijing begins cracking down on illegal margin trading, along with a new wave of IPOs across mainland China this week totaling around 6.7 trillion yuan (US$1.1 trillion). Margin trading is over three times as prominent in China than in the US.
The drop also comes a day after Janet Yellen indicated that the Federal Reserve will be slow in raising interest rates, highlighting investors’ concerns for the US, China and the rest of the global economy.
The Chinese shares have had impressive gains this year and remains up over 45% year-to-date. The Shanghai Composite began 2015 standing at 3,234 points, and remains over 4,600 points as of Friday, June 19th.
- Chinese Shares Enter Correction Territory - 19/06/2015
- China’s New Silk Road to Benefit Frontier Markets - 13/02/2015
- ASEAN-South Korea Ties to Strengthen - 15/12/2014
- China Cuts Rates in Surprise Move - 24/11/2014
- Bond Supply in Asia Set to Boom - 02/11/2014
- Asia’s Opportunities for Insurers - 18/10/2014
- Singapore, Hong Kong to Promote Yuan - 24/06/2014
- U.S. Firms Look to the Philippines - 11/06/2014
- Best Chinese Stocks for 2014 - 13/05/2014
- China’s Yuan Policies: Irrational? - 16/03/2014