China shares follow Asian bourses lower as oil rally fizzles

Thu Jan 21, 2016 5:17am EST
 
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By Pete Sweeney and Samuel Shen

SHANGHAI (Reuters) - China's fragile stock markets ended sharply lower on Thursday as oil prices failed to sustain a bounce from 13-year lows and other Asian markets went into reverse.

With tumbling oil prices indicative of slowing global growth, in which China plays a central part, the benchmark Shanghai Composite Index ended down 3.2 percent.

That followed a morning of up and down trade as the market lived up to its reputation for volatility, with moves amplified by low volumes.

The index has slumped more than 18 percent in 2016 as China's currency has come under pressure and economic indicators have confirmed its declining growth, putting the world's second-largest economy at the foreground of global investors' concerns.

At this level, investors who bought back into the market at the lowest point after regulators arrested a 40 percent crash last summer are back to square one.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen shed 2.9 percent, taking its losses for the year to more than 17 percent.

Lu Jie, head of China research at Robeco Asia Investment Center, said there was a vicious cycle in the markets.

"China falls trigger declines in overseas markets, which in turn fuel further slides in China markets. Panic has been amplified," he said.   Continued...

 
An investor walks past an electronic screen showing stock information at a brokerage house in Nanjing, Jiangsu province, January 19, 2016. REUTERS/China Daily