Chinese stocks dive as credit crunch fears escalate

Chinese stocks sank deeper into bear market territory on Tuesday as fears over a credit crunch in China escalated.

The Shanghai Composite index fell as much as 5.3% below the 1,900 mark, before recovering to trade 2.4% lower at 1,916. This is the first time the index has fallen below the 1,900 mark since January 2009 and it is now down 14.5% year to date. Last week, rating agency Fitch Ratings warned China may be nearing a credit crunch as its shadow banking system is spiraling out of control. Concerns deepened this week, as China's central bank indicated it is likely to continue its credit-tightening policy, stemming the flow of cheap money into the global economy. Other Asian markets were ...