- Chinese stocks tumbled in Tuesday morning trade, tracking steep losses seen overnight on Wall Street.
Stock indexes in the greater China region fell significantly on Tuesday, tracking steep losses seen overnight on Wall Street.
Hong Kong's closed down 5.1 percent at 30,595.42.
Meanwhile, the closed 3.4 percent lower at 3,369.71, posting its steepest loss in two years. The blue-chip CSI300 Index closed 2.9 percent lower at 4,148.33.
Markets were already under pressure this week following the pullback in the U.S. market.
"There's really nowhere to hide. If you review the market, across the board, there is very heavy selling pressure," said Hao Hong, chief strategist at China's Bank of Communications.
Hong recommended watching for dangers rather than potential gains in the near-term, although bonds — particularly government bonds — and gold appeared to be safe havens.
Despite recent jitters, the sell-off is not indicative of worsening economic fundamentals, said Ronald Wan, chief executive at Partners Financial Holdings in Hong Kong.
The Chinese markets were already shaky due to profit-taking on an early 2018 rally ahead of the long Lunar New Year holiday next week. So, the slump on Wall Street added to downside pressure, Wan added to CNBC.
"Market sentiment right now is kind of volatile and a bit fragile," he said, adding that the sell-off is likely temporary.
Volatility indexes measuring the fear factor in Chinese markets spiked on Tuesday with the HSI Volatility Index up as much as 52 percent from its previous close. The CBOE China ETF Volatility Index was up as much as 18 percent.
The Chinese markets were "more volatile than usual" over the last few weeks due to the results season of Chinese and Hong Kong companies, as well as a renewed and sweeping crackdown on financial irregularities on the mainland, said Samuel Siew, a Singapore-based investment analyst at Phillip Futures.
The losses on the mainland indexes were more subdued partly due to capital controls. There may also be support for stocks coming from political quarters.
Hong Kong-based CSOP Asset Management said in its latest market report on Friday that despite some shifts ahead of the long public holiday in China, the market is unlikely to collapse ahead of country's biggest annual political event: the so-called "Two Sessions" that starts early March.
The season encompasses the two meetings of the National People's Congress — China's largely rubber-stamp parliament — and the Chinese People's Political Consultative Conference National Committee, a largely ceremonial advisory body. The government will set political, economic and social agendas during those meetings.