Chinese stocks plunge but economy grows more than expected

Markets were mostly flat on Monday, with both the S&P 500 and the STOXX Europe 600 finishing little-changed.

However, Chinese stocks fell sharply. The Shanghai Composite fell 1.4 percent while the Shenzhen Composite plunged 4.3 percent.

At the end of last week, policy makers at the National Financial Work Conference mentioned “risk” 31 times and “regulation” 28 times, noted Jack Siu, an investment strategist for Asia-Pacific at Credit Suisse.

“There’s a couple of small midcap companies that suddenly changed their guidance from profit to significant loss and I don’t think that was expected by the market,” said Caroline Yu Maurer, head of Greater China equities at BNP Paribas Investment Partners.

Chinese stocks pared losses after a report showed that the economy grew 6.9 percent in the second quarter from a year earlier, better than the 6.8 percent consensus estimate from a Bloomberg survey.