UpdateSharp correction in Shanghai, Shenzhen and Hong Kong stock markets

Analysts predict today will see more selling of mainland shares after the sharp correction in the Shanghai, Shenzhen and Hong Kong stock markets yesterday, in a vicious cycle of selling as margin calls accelerate with the falling markets.

In one of its biggest single-day drops, the Shanghai Composite Index plunged 6.5 per cent to 4,620.27 points yesterday, while the Shenzhen Composite Index plummeted 5.52 per cent to 2,756.93 points. The Hang Seng Index closed down 2.23 per cent, or 626.9 points, at 27,454.31 points in its biggest one-day fall since December, while the Hang Seng H-share Index closed down 3.53 per cent, or 518.88 points, at 14,183 points.

The total value of stocks traded in Shanghai and Shenzhen reached a record of 2.42 trillion yuan (HK$3.06 trillion), breaking Tuesday's milestone of 2.16 trillion yuan.

Louis Tse, a director of VC Brokerage, said there could be continued selling of mainland shares today in response to margin calls. "It's a domino effect," he said.