China’s small-cap index fell 5.8 per cent on Monday amid concerns over tighter regulations as Chinese president Xi Jinping called on state-owned-enterprises to lower debt levels.
The Nasdaq-style ChiNext, which is home to many technology companies, extended losses seen earlier in the session to close down 5.1 per cent, its biggest daily fall since mid-December.
At the National Financial Work Conference this weekend, Xi Jinping called on state-owned enterprises to lower their debt levels and said the country’s financial officials must “get a grip” on “zombie” companies kept alive by infusions of cheap credit.
Mr Xi said China will deepen financial reforms, improve the coordination of financial regulation and shore up weak links in supervision.
The Shanghai Composite and Shenzhen Composite both took a sharp fall on Monday morning with the Shenzhen index falling as much as 4.5 per cent, while its Shanghai sibling fell as much as 2.6 per cent. The Shenzhen Composite closed down 4.3 per cent and the Shanghai Composite closed 1.4 per cent lower.
The CSI300, a collection of blue chips closed down 1.1 per cent after falling as much as 2.2 per cent during Monday’s session.