Shanghai shares suffered their second-largest daily fall this year, as worries about margin trading put an abrupt halt to the market’s 39% year-to-date rally, while an interest-rate cut in Australia failed to lift the market.
In Hong Kong, the Hang Seng Index tumbled 368.28 points, or 1.3%, to 27,755.54, its fourth straight day of losses. There, the benchmark gained 19% year-to-date through yesterday’s close, with analysts also calling for a short-term correction.
In Hong Kong, Hanergy Thin Film Power Group Ltd. was up 1% after its parent company agreed to buy its solar-panel assembly lines for $585 million. Hanergy is the world’s largest solar company by market capitalization.
Australian markets finished flat after a day of sharp swings. The Reserve Bank of Australia’s decision to cut its key cash rate to a new record low of 2% was initially met with a more than 1% rise in the market. But shares pared gains on speculation that country was at the end of its long rate-cutting cycle.
The RBA cut interest rates for the second time this year to shore up growth in the face of falling commodity prices and a China slowdown, but the country also faces the challenges of finding a new engine of growth as well as an overheated housing market.
The move sent the Australian dollar as low as$0.7795 against the U.S. dollar The Australian dollar recently rebounded to $0.7868.
Tokyo and Seoul markets remained closed for a holiday Tuesday.
CHINA
The Shanghai CSI 300 gave back 190.90 points, or 4%, to 4,596.84, its biggest daily percentage loss since Jan. 19, when the market plunged 7.7% on similar fears that Beijing was clamping down on the use of borrowed money by retail investors to buy stocks.
Analysts said there was no one piece of news knocking down the market, which many said was due for a correction, although local headlines Tuesday about another crackdown on margin financing added to already existing worries about the slowing economy and the prospect of new initial public offerings sucking liquidity out of the market.
The Shanghai Composite hiked Monday on enthusiasm that Beijing would continue to ease monetary policy after cutting interest rates and banks’ reserve requirement ratios. Retail investors have piled into the market, opening more than a million new trading accounts each week for six weeks in a row now.
But on Tuesday, state-run Shanghai Securities News reported that two more securities firms — Haitong Securities and Tebon Securities — have raised the requirements for margin financing. The firms raised the amount of cash clients need to deposit and reduced the amount of securities clients can use as collateral for margin trading and short selling.
In Shanghai, shares of Shanghai Great Wisdom Co. Ltd. slumped 9.99% today after the firm resumed trading following a halt Monday, when it said it was being investigated over information disclosure practices.
In other markets
In Taiwan, the Taiex slid 24.91 points, or 0.3%, to 9.820.13
In Singapore, the Straits Times index subtracted 11.51 points, or 0.3%, to 3,471.19
In New Zealand, the NZX 50 added 20.71 points, or 0.4%, to 5,787.79
In Australia, the S&P/ASX 200 lost 1.02 points to 5,826.52.
