Asia: Shanghai leads wider sell-off, Nikkei ends on flat note

The Shanghai Composite Index was down 5.77% to 3,686.92 when the market closed on Thursday, continuing three weeks of decline.

The Chinese markets experienced their worse three-week stock performance since 1992, despite regulatory moves to stem deflation.

The Shenzhen market fell by 5.3% while the smaller ChiNext board of small cap stocks fell by 1.7%.

Both are down by more than a third from peaks last month.

On Thursday, the China Securities Regulatory Commission said it would launch an investigation into suspected market manipulation possibly linked to market changes.

The governor of the People’s Bank of China also assured investors the central bank would hold the line against regional financial risk.

Meanwhile, Hong Kong’s Hang Seng Index fell by 0.83%, weighed down by Chinese market woes.

Japan’s Nikkei stock exchange was flat, closing up 0.08%, off a stronger yen due to a US job report taking the US dollar off highs.

Shares in Fast Retailing Co had fallen by 3.68% when the market closed after reporting a surprise double digit drop for June sales at its Uniqlo stores.

Still in Japan shares of the electronics makers Sony Corp dipped 0.31% while Panasonic dropped by 0.95%. Beverage giant Asahi was down 0.25%, while rival Kirin was up 1.55%.

Australia’s ASX was down 1.1% as Chinese markets continue to bleed, and retail sales disappoint. This was despite an improvement in Aussie Services Purchasing Managers' Index to growth and a weaker AUD.

Credit Suisse attributed the fall to a sell-off in mining stocks, and noted a focus on iron ore after a surge in exports from Port Hedland were reported for June.

Fortescue Metals Group plunged 4.71% while shares in Mineral Resources were down 8.12% and Whitehaven Coal also dipped 5.47%.