Chinese shares fell 5% to a three-month low after confusion about the direction of the Chinese currency caused wild gyrations on Asian stock markets.
A late rush of selling in Shanghai sent the CSI 300 index down 169 points to 3,192 points – its lowest since the aftermath of the summer crisis.
China guided the yuan slightly stronger for a second straight session on Monday in a move that appeared designed to calm concerns about a competitive devaluation, but only added to market confusion as to Beijing’s ultimate policy intent.
Monday’s fall in share prices followed a 10% plunge last week which triggered a global sell-off of riskier assets.
“Authorities are reluctant to let market forces rule, which along with their indecisiveness and lack of transparency is exacerbating uncertainty,” said Tapas Strickland, an economist at National Australia Bank.
“Understandably, amidst this global markets are selling Chinese policymakers’ ability to control their economy.”
