China Stocks Tumble Amid Economic Concerns and Central Bank Actions

China stocks slumped on Thursday, affected by global market weaknesses and investor concerns over economic woes. The central bank conducted a lower-rate lending operation, leading to market jitters. The Shanghai Composite index and Hang Seng Index both reached multi-month lows. Asian shares also declined, driven by a tech stock slump.

China's stock market experienced a significant decline on Thursday, closely following global market weaknesses as investors grew increasingly worried about the country's economic troubles. The Shanghai Composite index closed at its lowest point since February 19, and the Hang Seng Index ended at a three-month low. This downturn in Asian shares was largely prompted by a steep fall in global tech stocks, which led investors to seek safer assets like short-dated bonds, the yen, and the Swiss franc.

The country's central bank shook the markets again by conducting an unexpected lending operation on Thursday with much lower rates, indicating an attempt to inject heavier monetary stimulus into the economy. This move followed a cut in several benchmark lending rates earlier in the week. The negative reaction from China's stock markets signals that the urgent lending measures are being interpreted as evidence of more severe deflationary pressures and weak consumer demand than previously anticipated.

China recently reported weaker-than-expected GDP data, heightening concerns about the economy. Analysts like Lemon Zhang, an FX & EM macro strategist at Barclays, noted that further benchmark rate cuts might be on the horizon. By the close of trade, various indices reflected the turbulence: the Shanghai Composite index fell 0.52% to 2,886.74, the blue-chip CSI300 index was down 0.55%, and the Hang Seng Index dropped 1.77% to 17,004.97. Around the region, MSCI's Asia ex-Japan stock index weakened by 0.96%, while Japan's Nikkei index closed down 3.28%.

(With inputs from agencies.)