Equity markets in Asia, particularly in China, plunged at the start to the new week. While Tokyo’s benchmark index Nikkei 225 closed 1.26% lower, the CSI 300 Index of China’s biggest companies slumped more than 6% and stock markets in Shanghai and Shenzhen falling between 5-6% on concern a cash crunch will hurt growth in the world’s second-largest economy and pricing in an end to the Federal Reserve’s QE3.
The Hang Seng Index slid more than 2%, extending six weeks of losses. Over the weekend, China’s central bank urged lenders to control risks from credit expansion, while the government is trying to rebalance the economy, trying to downsize the shadow banking system. This could mean that credit is going to remain tight. The U.S. dollar appreciated against 15 of its 16 major peers while the yen weakened.