Chinese shares tumbled on Friday, after the country's securities market regulator said it had opened an investigation into suspected market manipulation as Beijing struggles to head off a full-blown crash that could damage an already slowing economy. After a slump of more than 20 percent in Chinese stocks since mid-June, the China Securities Regulatory Commission (CSRC) has set up a team to look at "clues of illegal manipulation across markets". The China Daily newspaper said on Friday that the CSRC was probing investors who used stock index futures to "short" the market, or bet on prices falling.
The benchmark Shanghai Composite Index slumped 5.02 percent, or 196.36 points, to 3,716.41. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dived 5.77 percent, or 127.82 points, to 2087.99. Chinese markets were among the world's best performers earlier this year, with Shanghai rising more than 150 percent over 12 months in a spectacular borrowing-fuelled bull run until it peaked on June 12.