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China's securities regulator says "panic sentiment" has set in mainland sharemarkets, contributing to an "irrational" sell-off that has defied the government's urgent attempts to stem the freefall in share prices, and forced half of listed companies to seek a trading halt.
China's central bank, the People's Bank of China, also stepped in to announce it would actively guard against systemic regional financial risks.
The comments were made just before the market open on Wednesday, but did little to stop heavy falls.
The benchmark Shanghai Composite Index was down as much as 8 per cent, before steadying slightly, down around 5 per cent early in Wednesday morning trade.
Ahead of trading on Wednesday, a further 660 companies asked for their shares to be suspended, taking the total number of companies suspended to 1429 out of the 2776 stocks listed on the main Shanghai and Shenzhen exchanges.
More measures were also unveiled on Wednesday to shore up confidence in a stock market that has slumped more than 30 per cent over the past month, wiping out more than $US3 trillion in market value.
The People's Bank of China said it would directly assist the China Securities Finance Corporation (CSFC), a provider of margin financing, in guaranteeing adequate liquidity for brokerages. Meanwhile, the country's insurance regulator said that qualified insurers may increase their ratio of equity assets to 40 per cent, from 30 per cent previously, by buying blue-chip stocks.
The stockmarket rout has also comprehensively choked off a slight recovery in the prices of commodities like iron ore and oil, dragging down shares in resource giants BHP Billiton, Rio Tinto and Fortescue, as well as the currencies of producing nations like Australia and Canada.
Iron ore had recovered to more than $US60 a tonne from a decade-low of $US47 in April. By Tuesday, it had dipped below $US50 after consecutive days of sharp declines.
The fall in iron ore comes as construction demand in China falters and the overwhelming majority of the country's steelmakers sit deeply in the red. Even still, major miners continue to increase shipments to China, contributing to a glut of supply and mounting stockpiles at major iron-ore ports, all while confidence is being battered by China's free-falling stockmarket.
In further bad news for steel demand, Chinese automakers are reporting a major dent in sales, describing last month as the "worst June ever".
Fortescue, among others, have previously cited China's surging long-term demand for cars as a key to filling in the gap in the demand for steel vacated by slowing construction in China.
"The plunging stock market is essentially a meat grinder, shredding money meant for buying cars," Cui Dongshu, the secretary-general of China's Passenger Car Association told Bloomberg.
He said an increasing number of car buyers in China are canceling their purchases and risking forfeiture of their down payments.
But some in the market remain resiliently optimistic. Goldman Sachs predicts the large-cap CSI 300 index will rally 27 per cent over the next year as government support measures – which have so far failed to prove effective – continue to kick in and monetary easing stimulates economic growth.
The bank's China strategist, Kinger Lau, said leveraged positions aren't big enough to trigger a market collapse.
"It's not in a bubble yet," Mr Lau said. "China's government has a lot of tools to support the market."
Another major concern is whether the market downturn will have a negative "wealth effect", dampening consumer sentiment just as Beijing is counting on consumption to make up for declining investment to achieve its stated economic growth target of "around" 7 per cent.
Chinese share market: Stocks plunge, half of listed stocks suspended from trading
China's central bank, the People's Bank of China, also stepped in to announce it would actively guard against systemic regional financial risks.
The comments were made just before the market open on Wednesday, but did little to stop heavy falls.
The benchmark Shanghai Composite Index was down as much as 8 per cent, before steadying slightly, down around 5 per cent early in Wednesday morning trade.
Ahead of trading on Wednesday, a further 660 companies asked for their shares to be suspended, taking the total number of companies suspended to 1429 out of the 2776 stocks listed on the main Shanghai and Shenzhen exchanges.
More measures were also unveiled on Wednesday to shore up confidence in a stock market that has slumped more than 30 per cent over the past month, wiping out more than $US3 trillion in market value.
The People's Bank of China said it would directly assist the China Securities Finance Corporation (CSFC), a provider of margin financing, in guaranteeing adequate liquidity for brokerages. Meanwhile, the country's insurance regulator said that qualified insurers may increase their ratio of equity assets to 40 per cent, from 30 per cent previously, by buying blue-chip stocks.
The stockmarket rout has also comprehensively choked off a slight recovery in the prices of commodities like iron ore and oil, dragging down shares in resource giants BHP Billiton, Rio Tinto and Fortescue, as well as the currencies of producing nations like Australia and Canada.
Iron ore had recovered to more than $US60 a tonne from a decade-low of $US47 in April. By Tuesday, it had dipped below $US50 after consecutive days of sharp declines.
The fall in iron ore comes as construction demand in China falters and the overwhelming majority of the country's steelmakers sit deeply in the red. Even still, major miners continue to increase shipments to China, contributing to a glut of supply and mounting stockpiles at major iron-ore ports, all while confidence is being battered by China's free-falling stockmarket.
In further bad news for steel demand, Chinese automakers are reporting a major dent in sales, describing last month as the "worst June ever".
Fortescue, among others, have previously cited China's surging long-term demand for cars as a key to filling in the gap in the demand for steel vacated by slowing construction in China.
"The plunging stock market is essentially a meat grinder, shredding money meant for buying cars," Cui Dongshu, the secretary-general of China's Passenger Car Association told Bloomberg.
He said an increasing number of car buyers in China are canceling their purchases and risking forfeiture of their down payments.
But some in the market remain resiliently optimistic. Goldman Sachs predicts the large-cap CSI 300 index will rally 27 per cent over the next year as government support measures – which have so far failed to prove effective – continue to kick in and monetary easing stimulates economic growth.
The bank's China strategist, Kinger Lau, said leveraged positions aren't big enough to trigger a market collapse.
"It's not in a bubble yet," Mr Lau said. "China's government has a lot of tools to support the market."
Another major concern is whether the market downturn will have a negative "wealth effect", dampening consumer sentiment just as Beijing is counting on consumption to make up for declining investment to achieve its stated economic growth target of "around" 7 per cent.
Chinese share market: Stocks plunge, half of listed stocks suspended from trading
