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China Bond Selloff Spreads to Stocks as Deleveraging Risks Mount

  • ChiNext leads fall as bond yields rise near a three-year high
  • There’s concern economic data in October will weaken: KGI
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China Early Data Shows Markets Upbeat vs Real Economy

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Chinese stocks fell the most since early August, breaking the calm that persisted through the recent Communist Party Congress, as sovereign bonds extended a monthly rout amid concern the government will step up efforts to reduce leverage in the financial sector.

The Shanghai Composite Index dropped as much as 1.7 percent on Monday, and closed 0.8 percent lower. Small-cap shares bore the brunt of the selling, with the ChiNext gauge tumbling as much as 2.5 percent. Equity indexes in Hong Kong reversed gains. The 10-year yield climbed 8 basis points to 3.93 percent, near a three-year high.