China, Hong Kong stocks tumble; more companies suspend trading
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China, Hong Kong stocks tumble; more companies suspend trading

Hong Kong’s main stock index dove 5.8 percent in Wednesday trading as investors there are rattled by the sharp sell-off in mainland Chinese shares. The Hang Seng rallied late, after falling to as low as 8.2 percent off an hour before close.

The benchmark Shanghai Composite Index closed down 5.90 percent, while the Shenzhen Composite Index, which tracks China’s second exchange, dropped 2.50 percent.

Other markets in Asia were also sharply down, with Japan’s Nikkei 225 dropping 3.1 percent.

The continuing downward trend followed news Tuesday that more than a quarter of companies in China suspended trading after prices of some fell by more than 50 percent., according to the Securities Times.

Dozens of more companies suspended trading early Wednesday.

Quartz reports: “These companies could technically remain suspended for as long as several months, which might give the market time to turn around. But their opting out of the market when things are down isn’t going to give investors much confidence in these companies’ corporate governance.”

China’s central bank has promised more credit to finance stock trading in the latest move aimed at stopping the plunge.

The central bank said Wednesday it would provide “ample liquidity to support stock market stability” through a government-owned company that lends to brokerages to finance share purchases.

The move adds to a flurry of increasingly frantic measures aimed at stopping a slide in which China’s main stock index has tumbled nearly 30 percent since early June.

Beijing earlier stepped in to stop the free fall by buying up large-cap companies, halting initial public offerings and cutting trading fees, but has so far failed to restore confidence.

“There is a mood of panic in the market and a large increase in the irrational dumping of shares, causing a strain of liquidity,” a spokesman for China Securities Regulatory Commission (CSRC) said.

The jitters spread throughout Asia Wednesday morning, with Taiwan stocks down 2 percent and rubber trading in the region down 5 percent.