BEIJING – Chinese stocks plunged Monday following government efforts to cool a market boom, recording their biggest one-day drop since a late February drop that triggered a global market sell-off.
The benchmark Shanghai Composite Index tumbled 8.3 percent to 3,670.40, falling for the third time in four sessions since the government raised a tax on trading last week. The index had dropped 2.7 percent Friday. The Shenzhen Composite Index for China's smaller second market fell 7.9 percent to 1,039.90.
It was Shanghai's biggest decline since Feb. 27, when the market slid 8.8 percent, triggering selloffs in Hong Kong, New York and London.
The index has dropped 15 percent since last Tuesday's record high of 4,334.92.
Beijing has been trying to cool a boom that by last week had pushed up Chinese stocks more than 50 percent so far this year. The rally has attracted millions of first-time investors who are pouring their savings into the market.
Drops in Chinese prices last week caused brief declines in markets in Tokyo, Hong Kong and elsewhere.
Most other Asian markets shrugged off Monday's plunge in the Chinese mainland. Shares in Australia, South Korea and the Philippines rose strongly to record highs. Tokyo's Nikkei 225 index edged up 0.08 percent, while Hong Kong's benchmark idex was up 0.6 percent.
Beijing keeps its markets largely isolated from global financial flows. Most Chinese shares are off-limits to foreign investors and financial controls prevent most Chinese from investing abroad. Also, analysts have been warning of a possible Chinese correction for weeks, reducing the element of surprise for investors abroad.
Philippine shares appeared to be benefiting from the sell-off in China as some foreign investors shift funds to elsewhere in the region, said Lawrence de Leon, an analyst at Accord Capital Equities Inc.
"A lot of money is going out of the China equities and are moving into other Asian markets, among them the Philippines," he said.
Even with the declines since last week, the Shanghai index is still up more than 37 percent since the start of the year, after rising more than 130 percent in 2006.
The surge has been driven by strong corporate profits and an influx of money from Chinese investors, who have opened millions of new trading accounts and are dipping into theirs savings and mortgaging homes to buy stocks.
Authorities have warned that the new money could be fueling a bubble and they say novices could be hurt by a sharp fall in prices.