Stocks in around 1,300 listed companies in China were still suspended.
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The Shenzhen Composite Index, which tracks stocks on China’s second exchange, jumped 4.09 percent, or 79.91 points, on Friday to 2,035.26 on turnover of 247.3 billion yuan, still losing 3.01 percent over the week.
The impact on Chinese investors is direct, but for investors in the United States, Europe and elsewhere, it’s not as simple.
Chinese authorities have unveiled market-boosting measures nearly every night over the past two weeks to reverse the rout in the world’s second-largest stock market as leveraged investors dumped shares amid margin calls. The government wants to nudge the economy toward slower but steadier growth.
The disconnect suggests the economic fallout might be limited now that the Chinese stock bubble has burst and Shanghai shares are in freefall. At the same time, state-owned media has encouraged ordinary Chinese to load up on shares.
While Beijing’s efforts appear to have put a floor under the stock market for now – on Friday morning China’s main indexes were just below the levels they opened at on Monday – it was still far from functioning normally. Robert Bao, who runs a $2 billion China-focused fund for the company, told Bloomberg that small- and medium-cap Hong Kong companies might also a good deal.
“If market conditions do not stabilise, we expect a statement of “whatever it takes” from the Chinese government, given that social stability is at stake and financial systemic risks are evident”.
More and more investors piling into the market, often using borrowed money, pushed share prices up 150% between June 2014 and June 2015.
As the losses have deepened, though, worries have increased and officials have taken direct action to stem the selling.
China’s A-share market is down about 35 percent from its recent peak, despite a 5.76 percent gain on Thursday. Any companies that were going to go public suspended their plans.
Chinese shares stormed to their largest ever two-day gain after a torrid month amid Beijing’s aggressive attempts to apply some control.
The rally also provided some support to regional markets and commodities, which had earlier this week been hammered by fears about a spillover effect beyond the mainland.
The Hang Seng index fell 5.8 per cent Wednesday, its biggest decline so far this year, before rebounding by 3.7 per cent on Thursday. However, in India, too, it’s an outcry in vain as investors have not got a single paisa in compensation after the several multi-crore stock market scams.
The stock market pessimism has also led families to adopt an increasingly bullish view about the country’s property market, said the survey conducted by the Southwestern University of Finance and Economics in Chengdu, capital city of Sichuan province.
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And since stocks only make up a small fraction of Chinese households’ wealth, the crisis is “pretty much still confined to the stock market in China with no real spillover to the broader Chinese economy”. They’ve lost about 30 percent since peaking last month. MSCI largely cited the lack of access for foreign investors to China’s market as the reason to continue to keep China out of its indexes.
