Asian shares extended their downward spiral, with China’s Shanghai Composite index down more than 3 percent from the get-go on Thursday. Even as regulators took fresh measures to arrest the selloff, panic selling in China extended, taking indexes down to multi-month lows.
On Wednesday Beijing eased rules for insurers to invest in blue-chips stocks, raised margin requirements for short positions against small-cap stocks and warned against “irrational selling”, among other initiatives. More than half of listed companies in China’s market have now halted trading in their shares – a move that’s spooking investors whose cash are locked up in these suspended stocks.
“[Beijing is] trying to backstop this, but one of the problem is having 13,000 companies suspended from trading and that makes life difficult for sellers and this had led to the spillover in the region,” Herald Van Der Linde, head of equity strategy for APAC at HSBC, told CNBC Asia’s “Squawk Box.” “Taiwan and South Korea all opened down quite substantially… amid the uncertainty in China. So in the near term, sentiment doesn’t look very good.”