China stocks on Friday posted some of their worst losses in seven years, as investors stampeded out of a market amid increasing signs the country's eight-month-long bull run is running out of fuel.
The key CSI300 index fell 7.9%, to 4,336.19, while the Shanghai Composite Index lost 7.4%, to 4,192.87 points.
For the SSEC, it was the worst one-day loss since Jan 19. For the CSI300, the drop was the biggest since June 2008.
Stocks fell across the board, with nearly 2,000 of the roughly 2,800 listed companies in Shanghai and Shenzhen slumping by their 10% daily limit.
After the CSI300 fell through several technical support levels, then there is "no technical buying support left following a massive rally over the last year or so," investment advisor Rivkin said in a note.
Further falls in China stocks "will send ripples throughout Asian markets," Rivkin said.
A more than doubling of China's stock market over the past year had been underpinned by rapidly-expanding margin financing, monetary easing and hopes of economic restructuring, but analysts said two of the three legs are now shaky.
Regulators have been cracking down on illegal margin financing and urging brokerages to tighten rules. Many investors have also faced increasingly expensive margin calls in the past week as share prices have retreated.
Outstanding margin loans shrank for the third straight day on Wednesday to 2.2 trillion yuan ($354.35 billion), as investors slashed 61.5 billion yuan worth of leverage during the period, the latest data shows.
Jiang Chao, strategist at Haitong Securities, said that further monetary easing - long another pillar of investor optimism - is also in question.
"Recent bond market performance reflects institutional investors' view that the rate cut cycle is coming to an end," he said.
Morgan Stanley sees Shanghai's benchmark index falling between 2 and 30% from current levels over the next 12 months, citing heavy equity issuance, weak corporate earnings, demanding valuations and excessive levels of margin financing.