Chinese shares have recovered slightly after a more than 8 per cent fall and the Shanghai Composite index is trading down 7.40 per cent at 4,192.87 this morning.
The Shanghai Composite had fallen by as much as 8.4 per cent to 4,146.09.
It marks a period of volatility for China’s markets, with the Shanghai Composite index suffering a 13 per cent decline last week.
Bernard Aw, market analyst at IG Group, explained that if brokerages feel equity markets are over-leveraged, making them over-exposed, they will cut exposure.
He added that “moderate deleveraging” in the market should be viewed positively for Chinese equity markets.
“It is probably not a bad idea to repeat my view that China’s leaders still view a strong capital market as beneficial for the Chinese economy, more importantly, a stable bull market is desired,” said Mr Aw.
“Before we transit into a slow bull run, it is quite certain that we would see some crazy volatility in the transitional period.”
The Shenzhen Composite is also trading down 7.87 per cent to 2,502.96.
