The Chinese stock market dropped further on Monday, taking the decline from recent record highs to 12 per cent, on concerns that equities in Shanghai and Shenzhen are overvalued and vulnerable to rising US bond yields after an extended rally fuelled by China’s economic recovery from the pandemic.
China’s CSI 300 index of Shanghai and Shenzhen-listed stocks dropped 3.5 per cent on Monday, with the biggest single-day fall in about seven months, exceeding the 10 per cent fall from recent highs that puts the market in a correction.
The sustained fall in prices adds to wider global fears around inflated asset prices as borrowing costs begin to increase.
“People are really focusing on how the increase in [US Treasury] yields will affect China’s stock market” said Michelle Lam, greater China economist at Société Générale.
The drop on Monday came despite data showing exports rose more than 60 per cent and imports rose 22 per cent from a year ago in the…