Chinese stocks were hammered on Friday, falling heavily to fresh multi-month lows following another brutal session on Wall Street.
And, like the Dow Jones Industrial Average and S&P 500, they’ve also experienced a technical correction, defined as a decline of 10% or more from an indexes recent peak.
The price action earlier today was just plain ugly.
The benchmark Shanghai Composite Index closed session down 4.02%, extending its losses from the recent highs to over 12.8%.
The losses were led by the telecoms sector, followed closely by energy and financials.
Some analysts think the fall could continue for some time yet.
“We are still in the depth of market volatility as sentiment was hurt by the double whammy of US market turmoil and deleveraging efforts at home,” Wu Kan, a Shanghai-based fund manager at Shanshan Finance, told Bloomberg. “Risk appetite has dropped sharply and I don’t think the situation will get any better before the Chinese New Year holiday.”
Other markets aligned to small caps and tech stocks were also under pressure, just not to the same degree as the carnage seen in large caps.
The CSI 500, Shenzhen Composite and tech-heavy ChiNext Index closed the morning session down 2.9%, 2.60% and 1.69% respectively.
They have also entered a technical correction, only earlier in the week.
The sharp plunge followed another ugly performance from US stocks which fell heavily into the close, mirroring the price action seen on Monday.
The Dow Jones Industrial Average skidded 1,032 points, or 4.15%, closing at 23,860 points. The S&P 500 and Nasdaq also fell with a thud, losing 3.75% and 3.9% respectively.