Four-year low forces Chinese markets into bear territory

<p>The Shanghai composite fell by more than five per cent.</p>

Chinese stocks have hit a four-and-a-half year low to leave them in bear territory.

The Shanghai Composite SSE index dropped by more than five per cent to end today (June 25th) at 1,859 points. As stocks are now 20 per cent lower than a recent peak, this means it has become a bear market.

January 2009 was the last time that the Shanghai Composite index fell below the 1,900 point mark, with Chinese monetary policy blamed for the drop.

BBC chief business correspondent Linda Yueh explained the nation's central bank, the People's Bank of China, has made it clear it will no longer be providing "cheap cash".

She added: "In fact, the central bank wants to root out the poorly-performing banks – especially those in the so-called shadow banking system."

Japanese stocks have also been hit this week and the Nikkei closed the day down 0.7 per cent. This adds to the 1.5 per cent dip recorded by the index on Monday.

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