Chinese markets plunged on reports that the China Securities and Exchange Commission launched investigations into firms on short selling and speculation, which contributed to summer sell-off. For instance, Citic was cited for misreporting the size of its derivatives and senior executives were accused of insider trading.

“Emerging markets have taken some time to catch up and I think today’s price action, although the immediate catalyst might have been the crackdown from the authorities on margin trading, this has been a little while coming, because industrial profits have been very poor,” global head of emerging markets cross asset strategy at UBS, Bhanu Baweja, told CNBC.

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Max Chen contributed to this article.