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Shanghai Plunged Nearly -5.3%, Worst One Day Drop In Four Years

By AvaTradeStock MarketsJun 24, 2013 07:02AM ET
www.investing.com/analysis/shanghai-plunged-nearly--5.3,-worst-one-day-drop-in-four-years-172588
Shanghai Plunged Nearly -5.3%, Worst One Day Drop In Four Years
By AvaTrade   |  Jun 24, 2013 07:02AM ET
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Asian markets started the week in a deep red territory on the first trading day of the week. Chinese stocks weighed during the session, and brought the Shanghai index to its knees by dropping nearly 5.3%. The index had the worst one day percentage drop in nearly 4 years, breaking its psychological level of 2000 for the first time since December 2012. Investors became highly concerned that Beijing may not take necessary steps to ease the liquidity crunch. The longer they play this game, further damage could occur to the economy. Goldman Sachs also reduced their growth forecast for China to 7.4% from their previous forecast of 7.7% for 2014.

The Shanghai Index was the worst performing index during the session, closing with a loss of 5.31%. The index is still down nearly -14.22% so far this month. The Hang Seng index was the second worst performer and closed with a loss of -2.22%. The Nikkei index also came under pressure, closing with a loss of -1.26%.

Lenders came under heavy selling pressure in mainland China due to a liquidity concerns. Shares of China Minsheng Banking Group and China Merchants Bank Co both plunged nearly -10% and -6% respectively. Shanghai Pudong Development Bank Co also dropped nearly -9.2%.

The European stock market is also mirroring the Asian losses during the early hours of trading. The German economic data- IFO business climate index came in at 105.9 while the forecast was for 106. However, the final reading was much better than the previous reading of 105.7. This has helped all major indices to bounce off from their lows of the day so far. The IBEX 35 index is the worst performing index during the session, and is down by nearly -1.43%. The FTSE MIB, the FTSE 100, the DAX are all trading lower with a loss of -1.36%, -0.66% and -1.09% respectively.

Kabel Deutschland is trading higher by nearly 2% after the Vodafone Group initiated a formal 7.7 billion euro cash offer for the company. Metro AG on the other hand, is trading lower by -2.5% after its rating cut by Citi Bank from neutral to sell.

DISCLOSURE & DISCLAIMER:
The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.

by Naeem Aslam
Shanghai Plunged Nearly -5.3%, Worst One Day Drop In Four Years
 

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Shanghai Plunged Nearly -5.3%, Worst One Day Drop In Four Years

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