Chinese stocks were volatile in September as global events, centring on the US financial system, heightened risk aversion. Over the month, the Hang Seng China Enterprises index, which measures the performance of Hong Kong-listed Chinese majority stateowned companies, ended 20% lower, while the local Shanghai Composite index was more resilient, falling 2.3% (both £, price only).In August, consumer prices fell to 4.9% year-on-year (y-o-y), from 6.3% y-o-y in July, providing authorities with greater flexibility to support economic growth. Accordingly, interest rates were reduced for the first time in six years and reserve requirements for smaller banks were eased, signalling the commitment to maintaining robust levels of expansion.The government also abolished stamp duty on share transactions and announced its plans to purchase shares in the three largest stateowned banks in efforts to support equity markets. Despite these measures, the unprecedented events in global financial markets largely overshadowed domestic newsflow and left equity markets lower over the month.