The benchmark Shanghai Composite Index was down 3 percent in afternoon trade, having tumbled 6.4 percent on Tuesday to its lowest close since December 1, 2014.
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Four listed companies suspended trading in their shares on Wednesday, saying major shareholders who had pledged shares as collateral faced margin calls and would seek ways to avoid forced liquidation.
“It’s just another in a long series of slumps that we have seen in this market, and it’s not the last we will see either because the market is still overpriced”, Michael Every, head of Financial Markets Research, Asia Pacific, at Rabobank told USA Today. The approach of the Lunar New Year didn’t help, as players become reluctant to invest for fear of any unexpected sharp falls in overseas markets.
Many investors have lost the stomach for the market after a wild ride since summer previous year, when shares crashed 40 percent.
Huang, whose timely bets on the direction of share prices propelled his Yourong Fund to the top of the country’s performance rankings, advised investors to sell shares as the stock market could come under pressure this year from both the economic slowdown and a potential surge in the supply of new shares.
In China, traders and analysts say Beijing appears to be shifting away from propping up the stock markets to focus on keeping the yuan stable and fostering economic growth. Beijing intervened to stem that rout and orchestrate a recovery of sorts, but anyone who mistook that for a bottom and bought in will have lost their shirt again in January. Last year, China’s growth was double that of the United States.
Asian stocks were dragged lower on Tuesday, as another shocker session in China led to region-wide declines.
Investors remained cautious ahead of the Federal Reserve’s policy statement on Wednesday for further signals on the USA central bank’s path over the next 18 months, as it embarks on its first tightening cycle in more than a decade.
Market volatility, it said, was not a reflection of the economy but rather showed that the market, regulatory environment and investors still needed to mature.
Shayne Heffernan Funds Manager at HEFFX holds a Ph.D.in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b.
The People’s Bank of China on Tuesday plowed 440 billion yuan ($66.8 billion) into the country’s economy through its regular open-market operations, following a 400 billion yuan injection last Thursday.
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The massive currency devaluation, however, has raised concerns among investors, and speculation of further weakening the yuan has fueled capital outflow.
