China stocks fall 6% from record highs

China's stocks slid the most in three months after the government tripled a tax on securities transactions to cool a rally that's drawing more than 300,000 new investors a day. The CSI 300 Index fell 268.41, or 6.4%, to 3899.88 as of the 11:30 a.m. midday break in Shanghai. It's almost doubled this year, helping drive the value of the nation's stocks to $2.47 trillion. The number of accounts at brokerages this week topped 100 million for the first time, according to China Securities Depository & Clearing Corp.

The surge in investment has made Chinese shares the most expensive in the Asia-Pacific region, with the CSI 300 Index trading at 48 times reported earnings, according to data compiled by Bloomberg data. That's more than double valuations in Japan and India, the region's next most expensive markets. Central bank officials, former U.S. Federal Reserve Chairman Alan Greenspan and Li Ka-shing, Asia's richest man, have all warned of a looming correction this month. The CSI 300, which tracks yuan-denominated A shares, yesterday rallied to a new high, its 11th record this month.

China has been trying to curb speculation in the market for months. A government crackdown on investments with borrowed money on Feb. 27 led to a 9.2% drop in the CSI 300 Index, the biggest decline since it was introduced in April 2005. The Shanghai Composite tumbled the most in a decade and the rout sparked a global sell-off that wiped out more than $3.2 trillion of stock market value.

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