Shanghai | Shanghai stocks ended the morning 2.4 per cent lower Monday, extending last week’s near 10-percent plunge as weak inflation figures at the weekend compounded the gloom over the economy. The benchmark Shanghai Composite Index sank 76.46 points, to 3,109.95, while the Shenzhen Composite Index, which tracks stocks on China’s second exchange, plunged 3.50 percent, or 69.30 points, to 1,909.42.
China’s consumer price inflation came in at 1.6 per cent in December, the government said on Saturday, well short of the government’s target of around three per cent.
In Hong Kong the benchmark Hang Seng Index slipped 2.45 per cent, or 501.08 points, to 19,952.63 by lunch. Global investors have been alarmed by slowing growth in the world’s second-largest economy, which is expected to have expanded last year at its slowest pace in a quarter of a century. Official data on fourth-quarter and annual growth is due to be released later in January.
Shanghai shares closed higher Friday after authorities reversed course and suspended a new circuit breaker mechanism that had fuelled a global rout by twice automatically closing Chinese markets early. China’s equity and currency markets remain very volatile even after the authorities have attempted to stem price movements, Moody’s Investors Service said in a commentary on Monday. China’s authorities are finding it increasingly difficult to reconcile the tensions inherent in designing and implementing credible and effective reform measures while maintaining economic, financial, and social stability, it said. Beijing is seeking to transition the country’s growth model away from reliance on exports and fixed-asset investment towards a consumer-driven economy, but the reform is proving bumpy.
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