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China shares plunge 6% amid capital outflow concerns

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The Chinese stockmarket has been hit by a steep loss of 6.4 per cent as large equity outflows and oil price falls continue to worry investors.

The benchmark Shanghai Composite ended 6.42 per cent at 2,749.79, its lowest point since early December 2014 and the biggest one-day drop since the 7 per cent fall on 7 January.

The Shenzhen Composite also dropped by 7.1 per cent, while the Hong Kong’s Hang Seng shedding 2.4 per cent to 18,879.44 points.

Equity outflows from the region reached a record $1trn in 2015 leading investors to worry capital flight could continue through 2016.

Stocks in China dropped even as the People’s Bank of China injected 440bn yuan ($67bn) into the financial system using reverse-repurchase agreements.

Also, brent crude prices fell 6.3 per cent to $30.15 a barrel during trade today, also leading US and other major Asian stocks to fall.

The Dow Jones fell 1.3 per cent on market close yesterday followed by Japan’s Nikkei 225, Asia’s biggest index, falling 2.4 per cent to close at 16,708.90 points. Korea’s Kospi was also down 1.2 per cent.

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  1. Excuse me for being dense, but would the Western world prefer the scenario we had in the 1970’s when the Saudis could hold the world to ransom by turning off the tap and forcing up the price of energy for everyone? Cheap oil is good for business and consumers. If we believe that renewables will play an increased role then the oil price can only fall in future and trying to prop it up for a few dinosaur companies (pun intended) is Luddite.

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