Chinese stocks have tumbled another 6.41 percent on the opening of its markets on Tuesday, extending Monday’s nine percent plunge.
The stock market falls follow China’s move to devalue its currency earlier this month and have triggered global fears that all is not well in the world’s second-biggest economy.
Al Jazeera’s Adrian Brown, reporting from Beijing, said the Chinese government had tried to reassure investors by investing state funds into the share market and allowing pension funds to buy shares “but everything the government has so far tried has failed”.
The slump in Chinese shares sparked panic across global markets on Monday, with the Dow Jones Industrial Average in New York initially diving more than 1,000 points, or six percent, before trimming its losses, while European stocks fell sharply.
Asian bourses cast off heavy early falls Tuesday to post gains by late morning
Tokyo’s Nikkei-225 index fell 3.47 percent in early trade but later recovered by more than two percent.
Hong Kong opened 0.67 percent lower, South Korea was trading flat and the Philippines’ index was trading 2.8 percent lower.Australian stocks also dropped 1.41 percent on opening on Tuesday but have since managed to recover ground and have been trading higher than Monday’s four percent plunge.
The main reason the drop in Chinese shares had dragged down markets in the Asia-Pacific region, home to many of China’s biggest trading partners, was “a fear that the slowdown in China’s economy is worse than the government is letting on,” our correspondent said.
Monday saw the steepest falls in Chinese stocks since 2007, a day Chinese authorities called Black Monday.
The Shanghai index has lost more than 30 per cent of its value since June in a massive selloff.David Blanchflower, professor of economics at Dartmouth College and former member of the Bank of England’s interest rate setting policy committee, told Al Jazeera that the sell-off may not be over.
“The question here is if this is a big turning point or is this the end,” Blanchflower said.
“The worry for any policy maker is that they probably need to act as if it’s a turning point downwards and try to prevent more harm.
“That’s not easy with interest rates at zero, lots of quantitative easing being done and fiscal authorities on holiday.
“It is a very dangerous time. Central banks can’t cut rates by 500 basis points like they did in 2008 and this looks like a global crisis, it’s a Black Monday, the question is, does it become a panic?” Blanchflower said. Al Jazeera