The Shanghai stock market on Monday hit a 21-month low as investors shrugged off the impact of the Fannie Mae and Freddie Mac bail-outs and a Chinese government attempt to reduce the supply of shares on the market.

The Shanghai composite index finished 2.7 per cent down at 2,143.42 points – the lowest close since December 11 2006. The gains made in 2007, when Shanghai was Asia best-performing market, have been wiped out.