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Friday, January 15, 2016, 16:20

Shanghai closes at lowest since Dec 2014

By Reuters

SHANGHAI - China stocks dropped more than 3 percent on Friday, capping another tumultuous week in which the Shanghai Composite index tried and failed to stay above lows hit during last year's summer crisis.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 3.2 percent, to 3,118.73, while the Shanghai Composite Index lost 3.5 percent, to 2,900.97 points, its lowest level since December 2014. It broke through a key support level from August.

For the week, the SSEC was down 9 percent while the CSI300 shed 7.2 percent.

Sentiment was hit by weaker-than-expected loan data, and investors took advantage of Thursday's 2 percent rebound to reduce equity exposure further.

The market was soft on Friday even as the number of mainland-listed companies whose major shareholders pledged not to reduce holdings in the near term has grown to at least 150.

"The crowd is still keen to pounce on Shanghai's great fall, and as such the final stage of market revulsion is yet to come," said Hong Hao, managing director at BOCOM International.

The market sank even as the number of China-listed companies whose major shareholders pledged not to reduce holdings in the near term grew to at least 150.

All main sectors fell, with resources and energy sectors leading the decline.

Upbeat economic figures earlier in the week, including forecast-beating trade and inward investment data, had tempered some of the fears about the slowdown in the world's second-largest economy, but Friday brought news that fresh lending by Chinese banks was weaker than expected in December and well down on the previous month.

China's major share indexes have lost 16-18 percent so far in 2016, and although the close is the lowest since December 2014, the 2015 intraday lows chalked up in August, when the market lost more than 40 percent in a summer crash, have still to be breached.

The August low might have been lower still, had regulators not wheeled out a raft of measures to support the market, and some think Beijing would do the same again to try to stop the indexes breaching those levels.

Weekly data from the Shanghai Stock Exchange shows money shifting into exchange traded funds (ETFs) tracking bonds, gold and money markets at the start of January.

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