In Hong Kong, shares in flag carrier Cathay Pacific hit their lowest point since November after its earnings missed estimates, hit by fuel hedging costs.
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The energy index decreased 1.09 percent, weighed down by a drop of more than 1 percent in oil majors Exxon, Chevron and Conocophilips. This is the first time since China embraced a free-market economy 30 years ago that state measures have not worked.
Analysts said the US central bank, which has held rates at near-zero levels since December 2008, may decide against tightening monetary policy in September amid persistent concerns over China. Signs of government buying have appeared at that price on the Shanghai Composite at least four times over the past six weeks.
Officials have armed a state agency with more than $US400 billion to stop a $US4 trillion rout.
Property companies also fell.
Even after the declines, Chinese shares remain expensive relative to global peers.
As the state battles to prop up stock prices, investors with the most at stake are cashing out.
The Hang Seng Index dropped 1.5 per cent. The Hang Seng China Enterprises Index of Chinese stocks in Hong Kong slumped 2 per cent, capping its biggest weekly loss since 2011.
The Caixin’s Purchasing Manager’s Index (PMI), which tracks activity in Chinese factories and workshops, fell from 47.8 in July to 47.1 in August. While a figure above 50 signals growth, anything below that indicates contraction. “It points towards the narrative that we could see a further slowdown in China. That is worrying for global economy”.
“With the decline in land sales in all but a small handful of cities, many localities will have problems servicing debt, much less to finance new construction projects”, says Victor Shih, a professor at the University of California at San Diego. Jiangxi Hongdu Aviation Industry also dropped 8.09% to end at 27.93 yuan (US$4.37). Worldwide investors have sold more than $US7 billion of Shanghai shares through an exchange link with Hong Kong since July 3.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 3.2 per cent, to 3,761.45, while the Shanghai Composite Index lost 3.4 per cent, to 3,664.29 points The SSEC is now down about 7 per cent since China devalued the yuan by almost 2 per cent on August 11.
A weaker yuan is also reducing the attractiveness of Chinese assets.
The Shanghai Composite Index is down 0.7% at 3769.23 after a volatile day of trading Wednesday that rippled into global markets. The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, slipped three basis points to 2.58 per cent.
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“The concern over the weak economy is definitely there”, Phillip Securities analyst Chen Xingyu told AFP. Whether the previous upward trend could continue remains questionable.
