Chinese stocks continue to plunge after ‘Black Monday’

Chinese stocks continued to drop on Tuesday after its steepest drop in almost eight years the day before.

The Shanghai Composite dropped 6% on Tuesday, after plunging 8.5% on Monday.

Despite shares in China continuing to fall sharply, shares in Japan, Australia recovered from earlier losses – indicating that China’s effect on stocks was waning.

Australia’s S&P ASX/200 rose by 2.2%, Japan’s Nikkei 225 climbed up 0.7%, and South Korea’s Kospi was up 1.6 per cent.

Yukino Yamada, senior strategist at Daiwa Securities, told Reuters:

“There appears to be buyback as many markets look oversold after panicky selling in the last few days. Even the shares that had little business ties with China were sold,”

Global markets have been affected by concerns that China’s economy, one of the most important players in the world economy, has been growing at a rate not nearly close to Beijing’s 7 percent target for the year.

What has investors worried is that if Chinese economic growth slows down countries which rely on high demand from the country will be affected.

China is the world’s second largest economy and second largest importer of goods and commercial services.

“Global investors are cannibalising each other. Calling it a market disaster is not an overstatement,” said Zhou Lin, an analyst at Huatai Securities. “The mood of panic is dominating the market … And I don’t see any signs of meaningful government intervention.”