China stocks tumble the most in 5 months amid signs of tighter regulation

SHANGHAI: Shanghai stocks plunged over 4 per cent in their worst day in five months on Friday as investors scrambled to take profit amid signs of tighter regulatory scrutiny after a recent market resurgence fuelled concerns of bubbles forming.

Sentiment was also dampened by poor economic data and weak global markets though some investors see a correction in China's market as good entry point.

The blue-chip CSI300 index fell 4 per cent, to 3,657.58 points, while the Shanghai Composite Index ended down 4.4 per cent at 2,969.86 points. Both indices logged their worst session since October 11.


Investors dumped stocks amid signs of tighter regulatory oversight after the market rebounded over 20 per cent this year on loose credit conditions and hopes for a Sino-US trade deal.

China's banking watchdog has punished two lenders for illegally channellisng money into the stock market, the official Securities Times said on Friday.

In addition, China's securities regulator said its Guangdong branch is closely monitoring grey-market margin financing and has banned brokerages from cooperating with shadow lenders.

Economic data doesn't help market sentiment.

China's exports tumbled the most in three years in February while imports fell for the third straight month, pointing to a further slowdown in the economy despite a spate of support measures.

"Today's trade figures reinforce our view that China's trade recession has started to emerge," Raymond Yeung, Greater China chief economist at ANZ, wrote in a note.

Financial firms led the decline, as brokers slapped a rare "sell" ratings on bellwethers, dragging the sector lower.