By Laura He, MarketWatch
Reuters Enlarge Image
HONG KONG (MarketWatch) — Chinese stocks dived the most in over six years Monday, with a wide sell-off sweeping across the financial sector as investors turned jittery over the latest move by securities regulators to clean up the margin-trading business.
The benchmark Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.55% plunged 7.7% to close at 3,116.35, posting its biggest daily percentage decline since June 2008 . Prior to Monday’s heavy loss, the index was up 4.4% for the month to date, extending gains after finishing 2014 with a sharp 53% advance.
The plunge in mainland China helped to push Hong Kong’s benchmark Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.83% down 1.5%, with the Hang Seng China Enterprises — which tracks Hong Kong-listed mainland Chinese companies — off 5%.
The China Securities Regulatory Commission, the nation’s top market watchdog, announced Friday that a dozen brokerage firms had been punished for violations of margin-trading rules after a two-week overhaul. Infractions included allowing customers to delay margin repayments by longer than currently allowed.
The three most severely punished brokers were Citic Securities Co., Haitong Securities Co. and a unit of Guotai Junan International Holdings Ltd., which were all banned from opening new customer accounts for three months.
The A-shares of both Citic Securities /zigman2/quotes/210326178/delayed CN:600030 +0.11% /zigman2/quotes/208139708/delayed HK:6030 -4.80% , which is owned by financial giant Citic Group, and Haitong Securities /zigman2/quotes/203443667/delayed CN:600837 +0.93% /zigman2/quotes/207313420/delayed HK:6837 -7.45% were suspended from trading after falling limit-down by 10%.
Other financial stocks, including banks and insurances, were also under heavy selling pressure in Shanghai.
China Citic Bank Corporation Ltd /zigman2/quotes/206411273/delayed CN:601998 +0.66% , another listed subsidiary of Citic Group, Bank of China Ltd. /zigman2/quotes/209359942/delayed CN:601988 +1.31% /zigman2/quotes/204682472/delayed HK:3988 -0.78% /zigman2/quotes/201568493/composite BACHY -0.49% , Industrial & Commercial Bank of China Ltd. /zigman2/quotes/202525815/delayed CN:601398 +0.46% /zigman2/quotes/201401473/delayed HK:1398 -1.36% /zigman2/quotes/204265987/composite IDCBF -6.88% and Agricultural Bank of China Ltd. /zigman2/quotes/204629388/delayed CN:601288 +1.42% /zigman2/quotes/200705246/delayed HK:1288 -0.85% /zigman2/quotes/209398792/composite ACGBF -1.52% all hit the 10% daily price-drop limit.
Among major insurers, China Life Insurance Co. Ltd. /zigman2/quotes/204766889/delayed CN:601628 -0.44% /zigman2/quotes/202359856/delayed HK:2628 -2.98% and Ping An Insurance Group Co. /zigman2/quotes/202773380/delayed CN:601318 +0.63% /zigman2/quotes/210315058/delayed HK:2318 -4.34% /zigman2/quotes/202212125/composite PNGAY -2.07% likewise saw their A-shares suspended after their price falls exceeded the daily limit.
The Chinese financial sector in Hong Kong market didn’t escape the sharp sell-off either. Major underperformers included Haitong Securities (down 16.5%), Citic Securities (down 16.5%), Shenyin Wanguo HK Ltd. /zigman2/quotes/208006958/delayed HK:218 -2.15% (down 15%), and China Galaxy Securities Co. /zigman2/quotes/206618523/delayed HK:6881 -6.34% (down 13.2%).
Also affecting sentiment was a fresh fall in home prices across China’s major cities.
Among the Shanghai-listed shares of top mainland Chinese developers, both Gemdale Corp. /zigman2/quotes/208026094/delayed CN:600383 +5.22% and Poly Real Estate Group Co. /zigman2/quotes/201864015/delayed CN:600048 +4.17% gave up 10%.
Among the real-estate names listed in Hong Kong, China Vanke Co. /zigman2/quotes/203851375/delayed HK:2202 +5.17% retreated 6.3%, China Overseas Land & Investment Ltd. /zigman2/quotes/205731176/delayed HK:688 +4.89% /zigman2/quotes/210412581/composite CAOVF +1.89% lost 3.5%, and China Resources Land Ltd. /zigman2/quotes/202417326/delayed HK:1109 +4.21% /zigman2/quotes/201656413/composite CRBJF -1.50% dropped 3.1%.
However, other Asian markets were boosted by a rebound in the U.S. stocks at the end of last week. Japan’s Nikkei Average /zigman2/quotes/210597971/delayed JP:NIK +1.07% ended up 0.9%, and the broader Topix tacked on 0.6%.