On June 25, Beijing News reported that, on June 24, the Chinese domestic stock market suffered a major landslide, losing RMB 1.34 trillion (around US$194 billion) in one day. The Shanghai Stock Exchange Index dropped below 2,000, which was the biggest single-day decline in 46 months. Over 200 stocks were suspended from trading. The banking stocks suffered the biggest loss. In the weeks before this landslide, a number of Chinese banks had been running very low on liquidity. The Shanghai Inter Bank Offered Rate (SHIBOR) reached over 13 percent, which was much higher than the normal level of less than 4 percent. The central bank did not immediately inject money into the market this time like it had in previous years. Sectors related to banking, such as insurance and brokerage, all suffered major losses in this round of crisis. Experts expressed the belief that mid-sized banks were the biggest losers in this wave and that this market landslide was a clear signal calling for better risk management in the Chinese banking industry. Some also blamed the QE exit strategy that the U.S. Federal Reserve had announced as being responsible for triggering the event. Since 2009, there have been four other Chinese domestic stock market landslides at this level.
Source: Beijing News, June 25, 2013
http://www.bjnews.com.cn/finance/2013/06/25/269993.html