China Stocks Skid Sharply More Than 5% on Friday

The flagship indexes also posted their worst weekly performance since August, losing over 5%.

China stocks tumbled more than 5% on Friday in their biggest one-day loss in three months as a fresh regulatory crackdown and deteriorating profits triggered profit-taking after a recent rebound, Reuters has reported.

The blue-chip CSI300 index slumped 5.4%, to 3,556.99 points, while the Shanghai Composite Index plunged 5.5% to 3,436.30, both registering their biggest percentage loss since late August, the depth of a summer market rout, according to Reuters.

The flagship indexes also posted their worst weekly performance since August, losing over 5%.

Mainland stocks fell across the board, with the industrial sector and brokerage stocks among the worst casualties.

Mainland investors were taken aback by news that China's securities regulator had urged brokerages to cease financing clients' stocks purchases through over-the-counter swap contracts, the government's latest step to reduce leverage.

The China Securities Regulatory Commission (CSRC) also started investigations into China's biggest brokerage CITIC Securities and its smaller rival Guosen Securities, while sources told Reuters on Friday that another major brokerage, Haitong Securities, was also under probe.

Both CITIC and Guosen slumped 10%, the downward daily limit, while Haitong was suspended from trading.

Further weighing on sentiment was data on Friday showing that profits earned by Chinese industrial companies fell 4.6% in October, declining for the fifth consecutive month.