Investing.com - China’s stock market has fallen into a bear market, as fears of a trade war hit investor confidence.
The Shanghai Composite index dropped 0.5% on Tuesday, which means it has fallen more than 20% from its recent peak in January into official bear market territory.
Chinese stocks have come under pressure in recent weeks amid concerns over the strength of economy and an emerging trade war with the U.S., which investors fear will hit Chinese growth and financial stability.
Analysts believe Washington will implement tough new restrictions on Chinese investment in the coming days, which would further escalate tensions with Beijing.
Meanwhile, China’s yuan has fallen to its weakest level against the U.S. dollar this year after the People’s Bank of China cut reserve requirements for banks over the weekend.
The central bank move is a further sign of a shift to an easier stance to shield the economy from a trade war.
With shares already down 20% since January and worries about trade rising, investors fear more losses ahead.