China's stock market slid nearly 5 percent on Thursday, breaking major chart support, as a plunge in Hong Kong unsettled investors who were already jittery about monetary policy and a flood of new share offers.
The benchmark index's drop left it down 13 percent from its record high in mid-October, reinforcing a sense that China's spectacular bull market in stocks - which boosted the index fivefold since the start of 2006 - had ended for the time being.
"The China story may well be drawing to an end," UBS said in a report. The Shanghai Composite Index sank 4.85 percent, its largest daily drop since early July, to close at 5,330.023 points, its lowest level since late September. It finished less than two points off its intra-day low.
The index broke technical support at October's intra-day low of 5,462 points. This triggered a bearish right triangle formed by that level and the October and November peaks, a classic sign of the end of an uptrend. The pattern points down to the 5,000-point area.
Losing Shanghai stocks swamped gainers by 773 to 73. Turnover in Shanghai A shares was a very small 83.0 billion yuan ($11.2 billion), near a 15-week low, suggesting many investors had stopped trading because of gloom about the short-term outlook.
The index remains 99 percent higher than it was at the start of this year, and fund managers generally do not expect a crash. The market has suffered big dips before - it fell 21 percent over several days in May and June, before resuming its rise.
Corporate profits are still growing strongly - Bank of Communications predicted this week that banking industry profits would rise about 50 percent next year. Authorities are expected to intervene if necessary to prevent any collapse that could damage their efforts to develop an active stock market.
A heavy supply of fresh equity and authorities' efforts to slow fund flows into the market are dampening stocks, and a jump in bill yields this week pointed to tighter monetary policy.
Blue chips tumbled across sectors on Thursday. China Life, the biggest insurance company, plunged 6.50 percent to 61.23 yuan. Oil giant PetroChina, which soared in its debut on Monday, dropped 5.54 percent to 38.19 yuan, hitting its lowest level since the listing.
Aerospace Communications plunged its 10 percent daily limit to 23.18 yuan after saying a former chairman was being investigated for alleged false reporting of financial statements. Among the few gainers, Beijing Jingneng Thermal Power rose 1.32 percent to 15.40 yuan after Reuters reported that China Life was in advanced stages of talks to buy a major stake in Beijing Energy Investment Holding, which controls Beijing Jingneng.
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