Chinese stocks plunged Tuesday, with the benchmark Shanghai Composite Index losing 3.47 per cent, as China's securities regulator tightens margin financing, dpa reported. The Shenzhen Component Index also dropped 3.54 per cent and the ChiNext Index, tracking China's growth enterprises, went down 2.85 per cent. Analysts said stock declines on Monday and Tuesday reflect investors' unease about new margin-trading regulations. China's Securities Regulatory Commission on Friday published draft rules that would cap the size of the country's margin trading and short selling for the first time, at four times a brokerage's net capital. Margin trading, where investors borrow money from a broker to buy stocks, had fuelled recent rallies in China's stock market.
