Stockmarkets all but ignored another big sell-off in China yesterday, the third in four days of trading.
China's main stock index plunged more than 8 per cent after the government gave big hints that it would not be swayed from the course of trying to curtail rampant share speculation.
The Shanghai Composite Index closed at 3,670.4 points, down around 8.2 per cent and the second biggest fall in 10 years after the 8.4 per cent drop on February 28.
The market dropped 6.8 per cent last Wednesday after the tax on share deals was tripled to 0.3% from 0.1%, and it fell a further 3.2 per cent on Friday in unsettled conditions.
Yesterday's fall came after the Chinese government's main securities newspaper signaled that policy makers will not try to arrest the slump that wiped $US224 billion of market value on Wednesday, Thursday and Friday of last week.
Yesterday's losses takes the value wiped out to around $US340 billion.
Front-page editorials in official newspapers yesterday assured investors that the market's outlook was still positive, and that the tax rise was merely aimed at speculators.
But investors ignored that and sold.
The CSI 300 Index dropped 5.5 per cent in the early afternoon, and then fell further to close down around 7.7 per cent. (It combines the Shanghai and the Shenzhen indexes).
The Index has fallen 14 per cent from its May 29 peak after the government tripled the tax on share trades.
Not helping was another newspaper report which said the government will soon announce measures to cool the real estate market, including increasing the supply of land.
The speed that stock prices have soared by is "extremely unusual'' and underscores the "structural bubbles'' in the stock market, the Government-owned China Securities Journal wrote in an editorial yesterday.
China's increase in stamp duty was a "proper forward- looking adjustment'' to avoid greater "systemic risks'' in the market and to ensure its healthy development, the paper said.
In other words, don't expect any relief because the government wants the market to cool.
China has stepped up measures to curb lending to the real estate industry. The government tightened tax rules on property gains in February and has raised interest rates and taxes and restricted lending to developers.
As well the reserve ratio controlling bank lending has been progressively tightened, for little impact, it would seem.
Other major Asian markets again saw what was happening in China as something peculiar to that market and not a factor to influence sentiment outside the mainland.
Tokyo ended higher as did the Australian market which surged to new highs yesterday after a solid lead from Wall Street and price rises for copper, gold, lead and zinc and oil.
Japan's Nikkei rose 0.1 per cent, while indexes in South Korea, Australia, Singapore, the Philippines and Indonesia climbed to new highs. New Zealand's market was closed for a holiday.
China, seemingly, was not on the radar of traders in Asia yesterday. And it was the same in Europe and the US where local factors influenced markets.
The ASX200 index was up 59.4 points at to a new record of 6392.9, surpassing its previous best of 6369.0 posted on May 21 and the All Ordinaries also closed at a new high, up 56.1 points up at 6419.6, beating the May 21 record of 6372.5 points.
