Chinese stocks plunge as yuan hits one-year low

China stocks fell off a cliff on Monday, with the Shanghai Composite Index plunging below 3,000 points for the first time in more than 20 months.

The benchmark index tumbled 5.13 percent to end at 2,928.51 points, the lowest since June 16, 2020.

The smaller Shenzhen Component Index also plummeted to 10,379.28 points, a sharp drop of 6.08 percent.

The Nasdaq-style ChiNext Composite Index, meanwhile, slumped 5.56 to 2,169 points, while the STAR 50 Index closed 6.13 percent lower at 884.3 points.

In general, shares of more than 4,500 firms listed on the main boards of the Shanghai and Shenzhen bourses posted declines.

As one of the factors dragging the indices down, the Chinese yuan dropped to a one-year low against a strengthening dollar early on Monday, extending losses after posting its worst week since 2015.

The continued yuan weakness has shocked the global capital market and directly caused the commodities sectors to lead the decline in Shanghai and Shenzhen.

The domestic resurgence of the COVID-19 pandemic has also caused the Chinese economy to weaken, spooking financial markets.

The policy easing (by China) was less than expected, and supply chains have been hit hard, causing hardships for the operation of some enterprises, according to Avic Fund Management Co.

Among commodities sectors, base metals dived 8.7 percent, precious metals fell 7.1 percent, and the iron and steel industry ended down 6.7 percent.

The sub-indexes for the Internet sector, education, computer hardware, and the aerospace and defense industry all saw sharp declines in the session.

China International Capital Corporation said that the stock market may continue to shudder in the short term. But it expected opportunities to gradually outweigh risks in the medium and long term.