Chinese stocks extended the steepest five-day drop since 1996 in volatile trading as lower interest rates failed to halt a US$5 trillion rout, Bloomberg News reported.
The Shanghai Composite Index fell 1.3 percent to 2,927.29 at the close, after rising as much as 4.3 percent and declining 3.9 percent.
The cuts in borrowing costs and lenders’ reserve ratios were announced hours after the benchmark measure closed with a 7.6 percent drop on Tuesday.
Chinese equities have lost half their value since mid-June, as margin traders closed out bullish bets and concern deepened that valuations are unjustified by the weak economic outlook.
The government has halted intervention in the equity market this week as policy makers debate the merits of an unprecedented rescue, according to people familiar with the situation.
“The prevailing sentiment is still that investors want to cash out, whatever the government does,” said Ronald Wan, chief executive at Partners Capital International in Hong Kong.
“Confidence is already damaged. Doubts over the effectiveness of policies are getting bigger. The market will remain under selling pressure for a while.”
The People’s Bank of China said it will cut the one-year lending rate by 25 basis points to 4.6 percent and lower the required reserve ratio by 50 basis points for all banks.
The move, which follows the biggest devaluation of the yuan in two decades earlier this month, comes amid signs of decelerating growth for the world’s second-biggest economy.
“The PBOC’s reserve-requirement ratio cut cannot make up for the loss of liquidity resulting from the yuan’s depreciation,” Chia Woon Khien, Singapore-based portfolio manager at Nikko Asset Management Asia Ltd., told Bloomberg.
“If we’re lucky, China’s economy will start to recover from the fourth quarter.”
Hong Kong’s benchmark Hang Seng Index edged down, along with its H-share index.
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