stock market Photo:VCG

Stock markets on the Chinese mainland and Hong Kong plunged on Tuesday morning, with Shanghai and the Hang Seng opening down 0.97 percent and 3.07 percent respectively, as pessimism persists from a number of factors ranging from regulatory settings to geopolitics and a renewed outbreak of COVID-19 across a number of mainland cities.

In mainland markets, the benchmark Shanghai Composite Index fell 2.18 percent to 3,153.11 points, while the smaller Shenzhen index was down by 1.32 percent to 11,904.61 points as of press time. Both indexes recovered from earlier trading which saw Shanghai down by almost 3 percent while Shenzhen had tumbled by 2.4 percent.

Hong Kong's benchmark Hang Seng Index was down 1.5 percent as of press time on Tuesday after touching down a low of 7 percent, following a plunge of nearly 5 percent on Monday, the largest one-day drop since May 2020.

Meanwhile, the central parity rate of the Chinese currency renminbi, or the yuan, also weakened 254 pips to 6.3760 against the US dollar Tuesday, its weakest point since January 2022, according to the China Foreign Exchange Trade System. Offshore yuan weakened beyond 6.4 against the dollar in morning trading but strengthened to 6.3907 per dollar as of press time. 

Industry insiders said the weakening of the yuan was due to capital being withdrawn from emerging markets by Western investors to cope with rising margin requirements in their home markets and the prospect of imminent US interest rate hike, according to domestic financial news portal Sina.com.cn.