Shanghai shares slump 4%; Sydney slips after RBA rate cut – CNBC

Mainland markets plunge

Stung by local news reports that several Chinese brokerages have tightened requirements for margin financing, China’s Shanghai Composite index reversed a higher open to slump 4.06 percent, ending Tuesday at a two-week low. This was the bourse’s biggest single-day loss in nearly four months, according to Reuters.

The 80 percent run-up in mainland stocks since November has been anchored on a liquidity rush and markets may be in need of a correction, experts say. “The rally that we’ve seen is all due to liquidity, via southbound trading and the People’s bank of China. So there must be some concern,” Sam Le Cornu, co-head Asian Listed Equities & Head of Investments at Macquarie Asset Management, told CNBC’s “Capital Connection.”

Banking shares were among the most heavily-hit; major Chinese lenders such as China Construction Bank, Bank of China and Bank of Communications sagged nearly 5 percent each. Insurer Ping An Insurance and developer Poly Real Estate also closed down 4.8 and 6.9 percent, respectively.

In Hong Kong, the Hang Seng index also gave up early gains to close down 1.3 percent.

Casino plays were largely dismal following data that showed gambling revenue in Macau plummeted 38.8 percent in April from a year earlier, marking its eleventh consecutive monthly fall. Sands China, Melco Crown and SJM Holdings made losses between 0.8 and 1.1 percent, but Galaxy Entertainment advanced 1.8 percent.

Meanwhile, HSBC eased 1 percent ahead of first-quarter earnings due after market trading hours.

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Rest of Asia

Indonesia’s Jakarta Composite slipped briefly into negative territory before edging back up into the black, after first-quarter gross domestic product (GDP) came in slightly below expectations. The Indonesian economy grew 4.71 percent for the first three months of 2015 from a year earlier, missing Reuters expectations for growth of 4.95 percent.

The rupiah slide to a one-month low of 13,030 against the U.S. dollar.

In India, the benchmark BSE index and the broader Nifty index reversed earlier advances to drift down 0.4 percent each. In the previous session, both indices posted their biggest daily gains in months after India’s lower house of parliament approved the 2015/16 Finance Bill last Thursday.