China to lower securities fees following slump

[SHANGHAI] China's two major stock exchanges are to lower securities transaction fees following a recent slump on the markets, the official Xinhua news agency reported on Wednesday.

Xinhua did not elaborate on the details of the move, which was announced in a one-line dispatch.

The announcement comes after Shanghai shares closed down more than five per cent on Wednesday, resuming their downward trajectory a day after recording their biggest gains in more than six years.

After days of heightened volatility and a fortnight of heavy losses, the benchmark Shanghai Composite Index was steady for much of the day, and sometimes in positive territory, but slumped in the last hour of trading.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, plummeted 4.79 per cent.

The Shanghai index swung more than 10 per cent on Tuesday after a weekend interest rate cut had failed Monday to arrest two weeks of plunging prices.

When Shanghai peaked on June 12 it had risen more than 150 per cent over the previous 12 months, partly fuelled by margin trading - in which investors borrow cash to invest in stocks, a practice that magnifies both profits and losses.

Both Shanghai and Shenzhen have since fallen by more than 20 per cent, a common definition of a bear market, with the losses largely attributed to fears stocks were overvalued, profit-taking and margin traders unwinding their positions.

AFP