CHINA’S shares tumbled more than 8 percent yesterday amid renewed fears about the outlook for the world’s No. 2 economy, reviving the spectre of a full-blown market crash that prompted unprecedented government intervention earlier this month.

    Major indices suffered their largest one-day drop since 2007, shattering a period of relative calm in China’s volatile stock markets since the government unleashed a barrage of support measures to arrest a slump that began in mid-June.

    The CSI300 index of the largest listed companies in Shanghai and Shenzhen plunged 8.6 percent to 3,818.73, while the Shanghai Composite Index lost 8.5 percent to 3,725.56 points on turnover of 721.3 billion yuan (US$117.9 billion). The Shenzhen Composite Index slid 7 percent to 2,160.09 on turnover of 667.7 billion yuan.

    While the falls followed lackluster data on profit at Chinese industrial firms yesterday and a disappointing private factory sector survey Friday, there was little to explain the scale of the selloff.

    Some analysts said fears that China may hold off from further loosening of monetary policy had contributed to souring investor sentiment.

    “The recent rebound had been swift and strong, so there’s need for a technical correction,” said Yang Hai, strategist at Kaiyuan Securities.

    He said the trigger was “a sluggish U.S. market amid stronger expectations of a Fed rate rise in the fourth quarter. That, coupled with China’s rising pork prices, fuels concerns that China would refrain from loosening monetary policies further.”

    But some analysts attributed the steep drop to a slowing of government buying of shares to support the stock markets.

    Domestic brokerages estimate that State-owned margin lender China Securities Financial Corp. has spent hundreds of billions of yuan in supporting the market, although authorities haven’t disclosed a total figure.

    Meanwhile, turnover on the market has hovered about 1.2 trillion yuan in recent days, compared with more than 2 trillion yuan before the market slump, according to Qian Qimin from Shenyin Wanguo Securities. “It means that investors are still uncertain about the impact of any potential policy changes.”

    In late June and early July, authorities cut interest rates, suspended initial public offerings, relaxed margin-lending and collateral rules and enlisted brokerages to buy stocks to support share prices. (SD-Agencies)