(Bloomberg) — Chinas stocks slumped, extending Tuesdays plunge, amid growing concern the government will reduce intervention in equities.
The Shanghai Composite Index dropped 2.6 percent to 3,653.21 at 9:35 a.m. local time after sinking 6.2 percent on Tuesday, the most in three weeks. Margin traders reduced holdings of shares purchased with borrowed money for the first time in eight days on Tuesday. The Hang SengChinaEnterprises Index was little changed at a nine-month low.
As the state stepped in to shore up equities, Chinas wealthiest investors have been the quickest to bail out. The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nations clearing agency.
The Shanghai Composite had rebounded 14 percent from its July 8 low through Monday after the government took unprecedented measures to end a $4 trillion rout. The index rallied 5.9 percent last week even as the yuans biggest plunge in 21 years roiled global markets.
The securities regulator said Friday thatChinaSecurities Finance Corp., the state agency tasked with supporting share prices, will reduce buying as volatility falls.
Swings in Chinese markets has reverberated around the world over the past two months as slowing growth complicates efforts by the ruling Communist Party to loosen its grip on the financial system and shift to a more consumer-driven economy.
Chinawill introduce significant reform measures on state- owned companies, government revenue and taxes, Xinhua News Agency reported, citing a meeting chaired by President Xi Jinping.
The median stock on mainland bourses traded at 72 times reported earnings on Monday, higher than any of the worlds 10 largest markets. It was 68 at the peak of Chinas equity bubble in 2007, according to data compiled by Bloomberg.
