Asian stocks add to global rout after China's slump; BHP drops
(Bloomberg)Updated: 2007-02-28 14:17
China Tumbles
Shares also fell after U.S. durable goods orders fell 7.8
percent in January, reflecting the biggest slide in business equipment demand in
three years, according to figures released yesterday by the Commerce Department
in Washington.
China's Shanghai and Shenzhen 300 Index yesterday slumped 9.2 percent, also from a record. It had jumped 13 percent in the previous six sessions. The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, plunged 8.8 percent, the steepest drop since Feb. 18, 1997. The rout wiped out $107.8 billion from the market value of China's companies, which had doubled in the past year.
Stocks fell after the State Council, China's highest ruling body, approved a special task force to clamp down on illegal share offerings and other banned activities in the market.
Commodities Hit
China's government has introduced several measures over the past year to calm the stock market. Banks were urged to stop lending money for stock investments and to recall outstanding loans, the China Banking Regulatory Commission said Dec. 31. The People's Bank of China, the central bank, ordered banks to boost reserves four times in the past year to reduce money available for investment.
"With capital flows being so global it's hard for action in a large country
like China not to have an effect on other markets,'' said Amanda Smith, who
helps manage $6 billion at ING New Zealand Ltd. in Auckland.
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