Chinese shares tumbled heavily on Friday as news broke of investigations into major brokerage houses triggered widespread panic.
The benchmark Shanghai Composite Index fell 5.48 percent to close at 3,436.3 points, the largest decline since Aug. 24.
The smaller Shenzhen index lost 6.31 percent to close at 11,961.7 points. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, fell 6.48 percent to close at 2,649.55 points.
Total turnover on the two bourses stood at 1.14 trillion yuan (178.8billion U.S. dollars) up from 1.02 trillion yuan the previous day.
Altogether 285 shares in the two bourses hit the daily decline limit of 10 percent.
Brokerages led the rout, with 12 shares dropping by 10 percent and another eight by over 9.9 percent. Northeast Securities saw the smallest loss in the sector, down by 7 percent to 17.3 yuan per share.
On Thursday night, CITIC Securities and Guosen Securities released statements that they are under investigations by the country's securities regulator.
The market opened lower Friday morning and edged down, then started to collapse in the afternoon session after the news that another securities company was being investigated.
Media reported that Haitong Securities is also being investigated by the national regulator. Trading in the company's shares was suspended this morning.
Other heavyweight stocks like banks, insurance and infrastructure construction also ended the day with huge losses. CITIC Bank, New China Life Insurance, CRRC, China Railway and China Railway Construction all fell by over 7 percent.
Stagnant industrial data worsened this day's trading. Profits of China's major industrial firms fell 4.6 percent year on year in October, wider than the 0.1-percent decline posted in September, the National Bureau of Statistics said on Friday.
Military industry lost the momentum of previous days and slumped, with two shares down 10 percent and another two under AVIC Group down by over 8 percent.
Sub-indices of recently popular sectors like charging piles, e-commerce and 3D printing all dropped by over 7 percent.
Jufeng Investment Information believes the negative effects of IPO resumption still linger, but the market has begun to recover after its recent crisis and there will be more gains in the near future.
Analyst Chen Min with Founder Securities explained that previous rises were not supported by real performance, which brought about huge drops.
