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A woman reads the information on an electronic screen at a
brokerage house in Shanghai September 16, 2008. China's main stock index
shrugged off a cut in Chinese interest rates and succumbed to
Wall
Street-generated gloom Tuesday, with the benchmark Shanghai Composite Index
closing below 2,000 points for the first time in two years.. [Agencies]
Chinese investors dumped shares on Tuesday, as worries over the economy and
the spillover effect from Wall Street turmoil outweighed a surprise loose in the
country's monetary policy.
Panic selling sent the benchmark Shanghai Composite Index down to the lowest
level in 22 months, below the psychologically important level of 2,000 points.
The Chinese equity market re-opened Tuesday after the traditional Mid-Autumn
festival, embracing a mixed flow of bad and good news. The bad news came across
the globe from the turbulent Wall Street, where Lehman Brothers filed for
bankruptcy on Monday and Merrill Lynch would be sold to Bank of America. In
response, US stocks tumbled, with the Dow Jones Industrial Average tumbling more
than 500 points on Monday, triggering a wave of sell-off in the global market.
Chinese investors fear the worst is yet to come in the American financial
system, thus dragging the world's largest economy into the deep recession. The
US is the second largest destination for Chinese exports and its economic
health, especially the financial strength of the consumers is crucial to China's
exporters.
The good news came in the home turf from the central bank, which announced on
Monday a cut in lending rates and reserve requirement for small banks in a sharp
reversal of the monetary policy.
AUTHOR：Dong Zhixin | 
