Asian markets tumbled Monday, as China’s stocks closed in bear-market territory, and uncertainty about Greece hit sentiment across the region, China Daily reported.
Chinese stocks edged down amid volatile trade, with the benchmark Shanghai index swinging the most since 1992, despite the rate cut announced over the weekend.
The Shanghai Composite Index slumped 3.3 percent to close at 4,053.03 on Monday, extending the loss from its peak on June 12 to more than 20 percent. The gauge swung between a loss of 7.6 percent and a gain of 2.4 percent within the market hours.
The Shenzhen Component Index sank 5.8 percent to 13,566.27 at the close.
“Interest rate cut and targeted reserved requirement ratio (RRR) cut simultaneously are a dramatic move. But the market has been anticipating such a move,” said Hong Hao, chief strategist at BOCOM International Holdings, in a note released on Monday.
The People’s Bank of China has lowered the RRR by half a percentage point and the benchmark interest rate for a third time this year by 25 basis points, announced the central bank on Saturday.
The one-year benchmark deposit rate has been lowered by 115 basis points since thebeginning of this year and is now 2 percent, while that of the lending rate has been cut downby 100 basis points in total to 4.85 percent.
“Traders will likely seize the fleeting technical reprieve to exit their positions, and continue to induce short-term volatility,” said Hong, adding that the outstanding balance of margin trades through non-brokerage channels can be double the official data of as high as 2 trillion yuan ($322.2 billion).
According to agency reports, the Nikkei 225 in Tokyo closed down 2.88%, its largest percentage decline since January 6 this year, while the ASX 200 in Australia slumped a further 2.22%, taking its year-to-date gain to just 0.2%. The KOSPI in South Korea slid 1.42% while the Straits Times index in Singapore, in late trade, is lower by 1.30%.
India’s stock markets fell more than 2 percent on Monday, heading for their biggest daily decline in nearly a month.