The Shanghai Composite dropped by more than 7 per cent, the second largest fall this year.
The index fell 7.4 per cent to 4,192.88, which was actually a pick-up from an intra-day fall of 8.75 per cent. It sits just behind the 7.7 per cent drop seen in January.
“Reasons for the slump in China stretch far and wide, including deleveraging, frothy valuations and extreme volatility causing nervousness,” says IG markets analyst Stan Shamu. “While some markets in the region seem to have ignored some of the wild swings in China for a while, it’s now certainly casting a shadow on some key markets.”
“Recent falls in China are being greeted by mixed feelings among traders with a degree of scepticism that we could see a rebound at any time. For now, though, the bears are certainly in control with equities getting mauled.”