China stocks closed sharply lower on Tuesday, extending a selloff that has unnerved investors around the globe.
The benchmark Shanghai Composite declined 7.6%, while the smaller Shenzhen Composite shed 7.2%.
The People’s Bank of China, in what amounts to a minor stimulus measure, injected 150 billion yuan ($23.4 billion) into the financial system via seven-day reverse repo agreements on Tuesday, according to a statement on its website.
Japan’s Nikkei closed 4% lower.
Markets fared better elsewhere in Asia. After starting the day in the red, Australia’s ASX All Ordinaries and Seoul’s KOSPI Composite closed in positive territory.
Turbulence in Asia comes after a very rough Monday for U.S. stocks. Following an unprecedented 1,000-point decline at the open on Monday, the Dow closed with a loss of nearly 600 points.
Three factors continue to weigh on markets:
1. Concerns that China’s economy is slowing faster than analysts had anticipated.
2. Uncertainty over when the U.S. Federal Reserve will raise its benchmark interest rate.
3. The effect of exceedingly cheap oil — crude is now trading below $40, its lowest point in more than six years.
The focus on China has increased in recent days, especially after a key manufacturing index hit a 77-month low.
But some economists say global investors are overreacting to China’s economic risks.
“The collapse of the equity bubble tells us next to nothing about the state of China’s economy,” said Mark Williams, chief Asia economist at Capital Economics. “In fact, recent data have been more positive than the headlines might suggest, with large parts of the economy still looking strong.”