Chinese stocks, Shanghai SE Composite sank to 3 week low, erasing 6.15 percent to close at 3,748.16 on Tuesday. Shanghai SE share Index plunged even more losing 6.89 percent to close at 346.53, all Chinese markets deepen to a record low amid yuan devaluation and economic rout.
Last week, the central bank injected cash into the financial system to support the market after the dramatic devaluation of the yuan that led to a huge sold-off as investors flee.
Analysts said the immediate cause of Tuesday’s sharp sell-off was a delayed reaction to a Friday statement by China’s market regulator.
“With market fluctuations gradually shifting to normal, from wild and abnormal, we should let the market exercise its function of self-adjustment,” the China Securities Regulatory Commission said Friday in Beijing.
“If I heard the government saying it plans to stop actively supporting the market I would sell too,” Francis Cheung, a Hong Kong-based China strategist for brokerage CLSA, said Tuesday. He added that profit-taking by investors was also a likely factor in the drop in prices.
In Malaysia, FTSE Bursa Malaysia KLCI rose 0.45 percent to close at 1,579.60 on Tuesday. The Malaysian stock market has so far lost 8.5 percent in a month, bringing total loss in 12 months to 15.63 percent. FTSE Bursa Malaysia EMAS closed at 10,803.76 after gaining 0.33 percent.
Singapore Straits Times Index STI losses 0.58 percent to close at 3,049.65. Index in Hong Kong and Tokyo was down 1.57 percent and 0.32 percent respectively.