U.S. stocks plunged more than 2 percent Monday as Chinese stocks continued to tumble amid renewed fears of an economic and financial crisis. Shares in Chinese property giant Evergrande sank more than 80 percent on its Hong Kong exchange after Beijing suspended new shares in the company.
Uncertainty about Evergrande’s prospects continued to ripple throughout global markets after government regulators temporarily banned Shanghai and Shenzhen stock exchanges from dealing in new shares starting Monday. The move came amid ongoing concerns about the market turmoil in China that has coincided with moves by the Chinese government to pump more money into the country’s economy to counter slower growth.
The rout in Chinese markets has rattled global markets in recent days and forced several brokers to suspend trading, including Citigroup. WME Investor Michael Ovitz tweeted Monday morning that when markets closed Monday in the U.S., the tech-heavy Nasdaq and the Standard & Poor’s 500 both had their worst weekly losses in years.
Late last week, Chinese regulators announced they would offer more stimulus in the form of more lending to local governments in order to shore up confidence in the country’s stock market. On Sunday, the financial news service Reuter reported that Premier Li Keqiang said that China would be slowing down its economy. The comments mirrored those made by his predecessor, Wen Jiabao, after the chaos in September 2008, when the Shanghai Composite Index plunged 25 percent in one day before rebounding the next week.
Evergrande’s troubles are not limited to the mainland Chinese market. Evergrande has a stake in a New York company called Six Properties that is in the process of issuing shares. Those shares plummeted by 30 percent on Monday, helping to drag the U.S. stock market down as well.