Shanghai Stock Exchange Plunges Over 5% at Close

Shanghai shares plunged more than five per cent on profit-taking Tuesday, only a day after the benchmark composite index broke the 3,000 mark for the first time in more than three years.. The index closed down 5.43 per cent, or 163.99 points, at 2,856.27 on record turnover of 793.4 billion yuan ($128.2 billion).. The Shenzhen Composite Index, which tracks stocks on China's second exchange, sank 4.31 per cent, or 63.26 points, to 1,403.39 on turnover of 450.5 billion yuan.. Chinese shares have surged in recent weeks, with the Shanghai index rising more than 20 percent in the month to Monday's close, helped by a surprise interest rate cut on November 21.. The climb came despite signs of slowing economic growth, and was driven by expectations of further policy easing measures in response to more bad economic news.. But investors took profits Tuesday after authorities announced a new rule late Monday tightening the use of corporate bonds as collateral for short-term financing -- a move analysts said will curb investors' ability to trade on margin.. In a commentary Monday on the rising markets the official Xinhua news agency had warned: "For individual investors, who significantly outnumber institutional investors in domestic exchanges, greed now appears to triumph fear, with extraordinary, if not maniacal, numbers of new account openings and purchases that had not been seen for years.. "Should trends reverse, the volatility must not be understated.". Combined turnover reached a record 1.2 trillion yuan on Tuesday. The Shanghai volume was also an all-time high, analysts said.

Shanghai Stock Exchange Plunges Over 5% at Close

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