China stocks plunge on US debt, train crash

16:24, July 25, 2011

Chinese stocks tumbled Monday as investors sold off holdings increasingly worried about a possible default of government debt by the United States which is to bring the global economy back to a serious slowdown.

Also, railway shares plunged after the weekend deadly high-speed train wrecking accident in East China’s Zhejiang Province which has killed at least 36 people and injured more than 200.

The Shanghai composite index dived 82 points, or 3 percent, to 2,688.75 at the 3 p.m. close, the biggest drop since January 17.

The Shanghai index has slumped 4.3 percent this year, compared with a 0.8 percent retreat for the MSCI Emerging- Markets Index, on concern the government’s efforts to curb inflation will hurt economic growth.

CSR Corp. and China CNR Corp, the country’s biggest train makers, tumbled more than 8 percent after the weekend train collision and prompted the government to order a rail safety inspection.

China ordered a two-month inspection of rail safety and fired three officials after at least 36 people were killed in a high-speed train crash two days ago near the eastern city of Wenzhou. The collision will slow the pace of railway construction, analysts say.

U.S. House Speaker John Boehner told Congressional Republicans that there’s no agreement on a plan for raising the ceiling before a default threatened for August 2.

A Republican congressional official said Boehner, speaking by telephone to lawmakers, is reporting that discussions are continuing. The impasse has boosted the chance S&P will cut the U.S. credit rating from AAA within three months to 50 percent, the company said last week.

Source: People’s Daily Online