Analysts also fret that China’s economic engine could sputter further, causing problems generally for economies around the globe and specifically for US exports to China. In Hong Kong, the benchmark Hang Seng Index staged a strong rebound after a previous 5.8% loss, up 3.8%.
Advertisement
The dollar gained 0.6% to 121.41 yen, putting distance between a seven-week low of 120.41 touched overnight when it suffered a bruising 1.5% fall against the safe-haven Japanese currency.
In a statement sent to the Shanghai stock exchange yesterday, Sinopec said its second-quarter earnings likely rose over a thousand percent.
The gains came after China moved to stop “major” shareholders – those holding at least a five percent stake – from selling their stocks and launched a probe into short-selling in a bid to calm markets. The government has given money to brokerages to buy stocks – and ordered company executives not to sell their shares.
HONG KONG: Moves by the Chinese government to prop up the country’s falling stock market offered little confidence to Asian markets, even if they helped steady losses within China on Thursday. Foreign investors with more than a 5 per cent stake in Chinese firms are all strategic investors.
Most anxiety-ridden investors have turned to purging stocks that act as a proxy or have direct exposure to China, with most of the damage happening in Hong Kong.
It said more requested a suspension later, raising the total to more than 1,000 – the equivalent of nearly 36 percent of the total of 2,802 companies traded in Shanghai and Shenzhen.
Some 787 companies suspended trading on the exchanges in Shanghai and the southern city of Shenzhen by the end of trading Tuesday, according to China Business News.
Some measures adopted by regulators, including stepping up supervision of over-the-counter margin financing, are also believed to have played a role in weakening Chinese equity markets. “Liquidity is totally depleted”, Northeast Securities analyst Du Changchun told Reuters.
Historically, there hasn’t been much parallel pacing between China’s stock markets and its economy, said Bill Adams, senior worldwide economist at PNC Financial Services.
The plunge in China’s previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and China’s top leaders, who are already grappling with slowing growth in the world’s second largest economy.
Police and security regulators launched a joint probe Thursday into “vicious short-selling” on the country’s stock markets, the official Xinhua news agency reported, only giving limited details.
China’s sell-off has been felt in commodities and other markets.
It involves the selling of stock that is not actually held, in anticipation of a future fall in prices. It has cut interest rates, made more loans available to buyers of stocks and promised to investigate anyone involved in market manipulation.
Advertisement
Seasoned observers aren’t panicking, but broader concerns are growing as Chinese stock markets tumble further into bear territory less than a month after hitting record highs. Over the past year, tens of millions of ordinary people have invested in the stock market with the encouragement of the government.
