April 24, 2017 / 2:40 AM / 3 years ago

China stocks extend losses on tougher regulation

SHANGHAI, April 24 (Reuters) - China’s major stock indexes fell around 1 percent on Monday, extending last week’s sharp drop, after state media signalled Beijing would tolerate more market volatility as regulators clamp down on riskier forms of financing and coax companies to reduce debt.

Recent signs of stability in China’s economy “have provided a good external environment and a window of opportunity to reduce leverage in the financial system, strengthen supervision and ward off risks,” official Xinhua News Agency reported on Sunday.

“Over the past week, interbank rates trended higher, bond and capital markets suffered from sustained corrections and some institutions faced liquidity pressure. But these have little impact to the stability of the broader environment.”

The Shanghai Composite Index fell 1.2 percent to 3,135.15 points by 0221 GMT, after posting its biggest weekly loss of 2017 last week.

The CSI300 index fell 0.9 percent to 3,435.45 points.

China’s insurance regulator said on Sunday it will ramp up its supervision of insurance companies to make sure they comply with tighter risk controls and threatened to investigate executives who flout rules aimed at rooting out risk-taking.

Also over the weekend, China’s securities regulator said it had fined a former Shenzhen bourse official 251 million yuan ($36.5 million) for illegal trades to profit from company IPOs, underscoring Beijing’s drive to root out bad behaviour in its equities markets.

Investors have also been concerned that China’s economy could lose momentum in coming months as local governments launch more measures to cool heated propertyprices.

The Hang Seng index in Hong Kong was up 0.2 percent, to 24,089.75 points. (Reporting by Samuel Shen and John Ruwitch; Editing by Kim Coghill)

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