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China: Stocks open mixed after sharp selloff

Friday, May 29, 2015 - 09:45
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[SHANGHAI] China stocks opened mixed on Friday after a sharp plunge on Thursday, when benchmark indexes dropped over 6 per cent in record high turnover on concerns over margin finance and liquidity.

The CSI300 index rose 0.1 per cent to 4,839.53 points at open, while the Shanghai Composite Index lost 0.4 per cent to 4,603.47 points. Hong Kong shares eased by 0.2 per cent.

China CSI300 stock index futures for June was trading 0.2 per cent higher at 4,986, 146.47 points above the current value of the underlying index.

The CSI300 and the Shanghai Composite indexes both slumped in late afternoon trade on Thursday, ending down 6.7 per cent and 6.5 per cent, respectively, their worst day since Jan 19. In terms of points shed, the two indexes suffered their heaviest single day loss since 2008.

China's stock market has surged over 140 per cent over the past 12 months despite a flagging economy, as retail investors, including university students, barbers and janitors piled into the world's best performing market, though economists have warned that, based on economic fundamentals, the rally was unjustified.

Official data shows the surge has been accelerated by cheap credit, with the outstanding value of margin finance hitting a record 2 trillion yuan on Tuesday.

On Thursday morning at least three Chinese brokerages, said they would tighten margin requirements.

REUTERS