Fresh fall in Chinese home prices also weighs on markets

Reuters

Chinese stocks dive Monday morning, even as most other Asian markets trade higher.

HONG KONG (MarketWatch) — Chinese stocks dived the most in over six years Monday, with a wide sell-off sweeping across the financial sector as investors turned jittery over the latest move by securities regulators to clean up the margin-trading business.

The benchmark Shanghai Composite Index SHCOMP, -7.70%   plunged 7.7% to close at 3,116.35, posting its biggest daily percentage decline since June 2008 . Prior to Monday’s heavy loss, the index was up 4.4% for the month to date, extending gains after finishing 2014 with a sharp 53% advance.

The plunge in mainland China helped to push Hong Kong’s benchmark Hang Seng Index HSI, -1.51%  down 1.5%, with the Hang Seng China Enterprises — which tracks Hong Kong-listed mainland Chinese companies — off 5%.

The China Securities Regulatory Commission, the nation’s top market watchdog, announced Friday that a dozen brokerage firms had been punished for violations of margin-trading rules after a two-week overhaul. Infractions included allowing customers to delay margin repayments by longer than currently allowed.

The three most severely punished brokers were Citic Securities Co., Haitong Securities Co. and a unit of Guotai Junan International Holdings Ltd., which were all banned from opening new customer accounts for three months.

The A-shares of both Citic Securities 600030, -1.53% 6030, -16.46% which is owned by financial giant Citic Group, and Haitong Securities 600837, -0.29%6837, -16.52%  were suspended from trading after falling limit-down by 10%.

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