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China stocks closed down sharply on Friday, posting their worst weekly performance in over a month.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 4.6 per cent, to 3,589.54, its weakest performance since mid-June.
The Shanghai Composite Index lost 4.2 per cent, to 3,507.74 points, the sharpest weekly drop since the week ending July 3.
For the week, the CSI300 tumbled 11.9 per cent and the SSEC dropped 11.5 per cent.
Total volume of A shares traded in Shanghai was 36.9 billion shares, while Shenzhen volume was 26.0 billion shares.
China stocks tumbled as weak factory activity deepened concerns about the economy.
A sharp economic slowdown comes at a time when investors are already fretting about a possible withdrawal of government support for the volatile stock market.
Stock index futures also fell sharply across the board, signalling that bears have the upper hand against bulls as they face a showdown in the afternoon when August contracts will be settled.
Investor sentiment was hit by a private survey showing activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled.
There are also concerns of fresh capital outflows triggered by a sharply weaker yuan, after Beijing devalued the currency last week, but some analysts expect China to launch policies to ease liquidity and aid the economy.
"Today's weaker-than-expected PMI will add to mounting concerns over Chinese growth," economists at Capital Economics said in a report.
"Nonetheless, we continue to believe that sentiment is currently overly downbeat and that policy support will limit the downside risk to economic activity over the course of the next couple of quarters."
Investors dumped shares across the board, including companies with investments from government rescue funds, making their share price surges in the past two days short-lived.
Money into these stocks backed by the "national team" - institutions enlisted by the government to support the market - are speculative in nature, according to Gui Haoming, analyst at Shenwan Hongyuan Securities.
"Many market participants are totally at a loss, so they can only make speculative bets on such concepts," he said.
Telecoms and infrastructure were among the weakest sectors, while banking outperformed the broader market.
Hong Kong stocks post worst weekly loss in 4 yrs
Hong Kong stocks fell for the sixth straight day on Friday to their lowest level in months, with the benchmark posting its biggest weekly drop in almost four years, as global markets were roiled by concerns over a deteriorating Chinese economy.
The Hang Seng index fell 1.5 per cent, to 22,409.62, while the China Enterprises Index, which tracks large Chinese companies listed in Hong Kong, lost 2.0 per cent, to 10,195.05 points.
For the week, Hang Seng lost 6.6 per cent, its worst weekly performance since 2011.
Heightened concerns about China's economy added to fears that money was flowing out of emerging markets amid the region's currency turmoil and an anticipated US interest rate hike.
Stocks fell across the board, although an index tracking telecom stocks rose, led by Chinese telecom giants China Telecom, China Unicom and China Mobile on restructuring hopes.
In Hong Kong, most sectors fell, amid concerns that money was flowing out of emerging markets amid the region's currency turmoil and an anticipated US interest rate hike.
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