China's Stocks Post Record Drop; Extend Rout Past $350 Billion

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China's key stock index plunged by a record number of points after the government's main securities daily signaled officials won't try to halt a slump that's erased more than $350 billion of market value in four days.

The CSI 300 Index dropped 7.2 percent to 3530.19 as of 2:40 p.m. local time. The measure, which tripled in the past 10 months, has plunged 15 percent from its May 29 peak after the government increased the tax on share trades to 0.3 percent.

The speed that stock prices soared by was ``extremely unusual'' and highlighted ``structural bubbles'' in the market, the state-owned China Securities Journal wrote in an editorial.

About half of the stocks included in the CSI 300 plunged by the 10 percent daily limit

``Investors, particularly those who have recently entered the market, are a bit disappointed that the government hasn't done anything to support the market,''

China Vanke Co. led declines among property developers after a newspaper report said the government will soon announce measures to cool the real estate market, including increasing the supply of land.

Even after the recent declines, the CSI 300, which tracks yuan-denominated A shares listed on China's two exchanges, is up 72 percent this year.

`Unsustainable'
Volatile price moves within each trading day reflected the ``weak sentiment'' among investors and the fact that the rally was ``unsustainable,'' China Securities Journal, which is affiliated to Xinhua News Agency, said. The CSI 300 today gained as much as 0.5 percent and fell as much as 7.8 percent.

Low-Cost Housing
China Vanke, the nation's biggest property developer, retreated 1.30 yuan, or 9.3 percent, to 12.68. Poly Real Estate Group Co., China's third-largest developer by market value, dropped by the daily limit, sliding 3.90 yuan to 37.20.

The government also plans to build more low-cost housing, the Economic Times reported, citing unidentified sources.

China has stepped up measures to curb lending that's fueling a surge in real estate prices, seeking to maintain social stability. The government in February tightened tax rules on property gains, after it earlier raised interest rates and taxes and restricted lending to developers. Average prices in China's 70 largest cities rose 5.4 percent in April from a year earlier, according to the country's top planning body.