HONG KONG: China and Hong Kong stocks tumbled on Friday after a sharp drop in gold prices sparked a broad-based selloff across the markets, while state media warned against speculative trading.
By the midday break, the Shanghai Composite Index declined 1.2% to 4,108.46, after losing as much as 2.2% earlier in the day.
The blue-chip CSI 300 Index was down 1% after an earlier drop of as much as 2.2%.
Losses were spread across the board, with gold-related shares seeing the biggest selloff after a sudden retreat in bullion prices from record highs.
Sentiment was further dented after the state-owned Securities Times warned against the rally, while regulators including the Shanghai Gold Exchange announced news measures such as raising margin requirements to curb speculation.
“The regulatory authorities’ timely intervention is aimed at preventing potential risks from an overheated market,” the newspaper wrote.
“For ordinary investors, it’s better to view it rationally rather than blindly chasing higher prices.”
The CSI SSH gold equity index and the CSI SWS non-ferrous metal index both tumbled roughly 8.7%.
Miner Chifeng Gold, Shandong Gold and Zhongji Gold all plunged by their daily trading limit of 10%.
Among other losers, the rare earth index lost 6.5% and the liquor distillers weakened 2.9%.
The property sector weakened 3.4%, paring the sharp rally on Thursday after China reportedly dropped the borrowing limits on developers known as its “three red lines” policy.
Despite the declines on Friday, the Shanghai benchmark was up 3.5% so far in January, heading for its best monthly gain since August.
The blue-chip CSI 300 Index has climbed 1.6% for the month.
In Hong Kong, the benchmark Hang Seng Index slid 1.8% to 27,469.82, and the Hang Seng Tech Index also weakened 1.8%.
The Hang Seng Materials index tumbled 8.3%. Shares of Zijin Mining dropped 8.6%.
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