(Bloomberg) — Chinese stocks fell, extending the biggest one-day loss since 2007, as concern grew unprecedented government intervention will fail to shore up equities.
The Shanghai Composite Index slid 1.9 percent to 3,655.06 at 10:43 a.m. local time, dragged down by technology and industrial companies. Around eight shares dropped for every one that climbed in the gauge, which plunged 8.5 percent on Monday.
Chinese traders reduced leveraged stock bets on Monday by the most in two weeks as the stock plunge erased $613 billion in value. The securities regulator assured investors in a statement late Monday the government hasn’t withdrawn support for equities.
“An absence of late-night measures after such a big crash is unnerving retail investors,” said Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong. “The government’s current intervention was not able to stop the market’s slide and only delayed the decline.”
Monday’s retreat shattered the sense of calm that had fallen over mainland markets last week and raised questions over the viability of government efforts to prop up share prices as the economy slows. The International Monetary Fund has urged China to eventually unwind its support measures, according to a person familiar with the matter.
China Securities Finance Corp., a state-backed agency that provides margin financing and liquidity, hasn’t exited the stock market, China Securities Regulatory Commission spokesman Zhang Xiaojun said in a statement after the close of trading on Monday. There’s no truth to media reports that the government has withdrawn its support for the stock market, Zhang said.
