Chinese stocks tumble 6.41 percent on opening, extending previous day’s plunge, as other Asian stocks trade wildly.
Chinese stocks have tumbled another 6.41 percent on the opening of its markets on Tuesday, extending Monday’s nine percent plunge as worries mount over the state of its economy.
The falls followed wild early trading in Asian stocks, with some indices appearing to be recovering after opening lower on Tuesday.
Tokyo’s Nikkei-225 index fell 3.47 percent in early trade but has recovered by more than two percent.
Hong Kong opened 0.67 percent lower, South Korea was trading flat and the Philippines’ index was trading 2.8 percent lower.
Australian stocks also dropped 1.41 percent on opening on Tuesday but have since managed to recover ground and have been trading higher than yesterday’s four percent plunge.
This looks like a global crisis, it’s a Black Monday. The question is, does it become a panic?
The Asian markets’ shaky Tuesday start followed more steep falls in the US and Europe on Monday.
America’s Dow Jones industrial average briefly plunged a record 1,000-plus points before recovering to close down 3.8 percent for the day. Its broader S&P index also fell 3.9 percent.
Europe’s benchmark Euro Stoxx 50 of leading stocks also closed down 5.61 percent, reflecting similar declines across the region’s major bourses.
The third session of global selloff was triggered by the steepest falls in Chinese stocks since 2007, a day Chinese authorities called Black Monday.
The Shanghai index has lost more than 30 per cent of its value since June.
The stock market falls follow China’s move to devalue its currency earlier this month and have triggered global fears that all is not well in the world’s second-biggest economy.
Al Jazeera’s Adrian Brown, reporting from Beijing, said shares in some of the world’s biggest companies had plummeted in China’s crash.
“Many borrowed to buy shares and are now being forced to sell those shares to pay back the loans,” our correspondent said.
The main reason the drop in Chinese shares had dragged down markets in the Asia Pacific region, home to many of China’s biggest trading partners, was “a fear that the slowdown in China’s economy is worse than the government is letting on,” he said.
Al Jazeera’s Sohail Rahman later reported that the Chinese government was telling the media “to not tell investors how bad the situation could be”.
David Blanchflower, a Professor of Economics of Dartmouth College and former member of the Bank of England’s interest rate setting policy committee, told Al Jazeera that the sell-off may not be over.
“The question here is if this is a big turning point or is this the end,” Blanchflower said.
“The worry for any policy maker is that they probably need to act as if it’s a turning point downwards and try to prevent more harm.
“That’s not easy with interest rates at zero, lots of quantitative easing being done and fiscal authorities on holiday.
“It is a very dangerous time. Central banks can’t cut rates by 500 basis points like they did in 2008 and this looks like a global crisis, it’s a Black Monday, the question is, does it become a panic?” Blanchflower said.
