A move over the weekend to allow Chinese pension funds to pump billions into flagging stock market failed to comfort investors, who sent Shanghai stocks crashing more than 8 percent on Monday.
On Sunday China gave pension funds managed by local governments the green light to invest in the stock market for the first time. Pension funds, which could previously only invest in bank deposits and treasuries, will now be able to invest up to 30 percent of their net assets in the country's stocks, equity funds and balanced funds.
Together the funds have assets of more than two trillion yuan ($322 billion) that can be invested, meaning about 600 billion yuan ($97 billion) could theoretically go into the stock market, according to state media.
Yet the benchmark Shanghai Composite Index plummeted 8.5 percent to 3,210.89 points on Monday as investors continued to flee the equity market, extending last week's deep losses. Stocks in China's main benchmark have now entirely erased their previously lofty gains for the year.