Stock values on the Shenzhen and Shanghai markets have fallen by nearly a third in recent weeks, losing about $3.2 trillion.
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China shares rebounded sharply on Thursday, with the Shanghai Composite index posting its biggest percentage gain in six years, as a fresh round of government support measures stemmed panic selling. The government widened the scope of support measures after earlier interventions failed to stop a selloff that wiped out $3.9 trillion in less than a month.
More than 1,400 shares on the two markets remained suspended, Bloomberg News reported, almost half of all listed companies.
The Standard & Poor’s 500 index increased 27 points, or 1.3 percent, to 2,074 and the Nasdaq composite gained 71 points, or 1.4 percent, at 4,909.
“However, given the market is driven primarily by retail investors, it is impossible to predict how their sentiment may evolve”.
WALL STREET: Major USA indexes fell on worries about China and the logjam in talks between Greece and its creditors.
“The risk from Chinese equities markets is clearly impacting commodities markets”, IG Markets strategist Evan Lucas said in a research note.
For its part, market regulator the CSRC urged shareholders with stakes of more than five per cent in listed companies generally to buy more.
On Wednesday, China’s Securities Finance Corporation known as CSF announced that it will lend billions to big Chinese brokerage firms so they can buy more stocks.
– Reuters picA group of 21 brokerages has pledged to invest at least 120 billion yuan in a stock market fund, taking a page from the playbook used by J.P. Morgan and Guaranty Trust Co during the 1929 U.S. crash.
“I think investors are realizing that things aren’t all that bad here”, said Tom Wirth, senior investment officer for Chemung Canal Trust in Elmira, New York.
There are also fears that such a huge loss of wealth caused by the fall in share prices could lead to a political backlash in the world’s second largest economy, or precipitate a recession. When it reopened, the benchmark Hang Seng index plunged 43 percent, an event that spurred fundamental changes aimed at better protecting investors.
Hong Kong stocks recorded their biggest single-day loss for more than six years on Wednesday as the market turmoil spread across the region, but they were up more than three percent by the break Thursday.
Beijing continued to introduce measures to stabilize the markets Thursday, with the Public Security Ministry saying that it was investigating “malicious” short sellers in a bid to cut down on illegal market activity, as stated by Xinhua, the state-run news agency.
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The decline in Chinese stocks has called into question a policy that China’s government has attempted to put into effect since May 2014 in an effort to modernize market functions.
