A man reacts as he looks at stock market prices at a brokerage house in Shanghai, China, Monday, June 29, 2015. Chinese shares plunged more than five percent within an hour of markets opening Tuesday, June 30, 2015, extending falls that have put markets into bear territory despite a surprise interest rate cut at the weekend. AP
SHANGHAI, China – Chinese shares plunged more than five percent within an hour of markets opening Tuesday, extending falls that have put markets into bear territory despite a surprise interest rate cut at the weekend.
The benchmark Shanghai Composite Index slumped 5.03 percent, or 203.97 points, to 3,849.06, before recovering slightly in volatile trade.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, tumbled 6.33 percent, or 148.92 points, to 2,202.48.
When Shanghai peaked on June 12 it had risen more than 150 percent over the previous 12 months, partly fueled by margin trading — in which investors borrow cash to invest in stocks, a practice that enhances both profits and losses.
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Both Shanghai and Shenzhen have since fallen by more than 20 percent, a common definition of a bear market.
Analysts said the falls may become self-sustaining.
