Trading on the New York Stock Exchange was also disrupted by technical trouble that caused a shutdown lasting more than three hours.
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“The market is still uncertain, but it’s much better than previous days”, Qian Qimin, an analyst from Shenyin Wanguo Securities, told the AFP news agency.
As of 9 a.m.in Hong Kong, a few 1,439 mainland listed companies had suspended trading, more than half of the total.
On Wednesday, the Shanghai Composite closed down 5.9 percent.
The impact on Chinese investors is direct, but for investors in the US, Europe and elsewhere, it’s not as simple.
China stocks have taken another plunge, as the securities regulator warned the market was in the grip of “panic” selling after fresh government moves failed to arrest a rout that has now infected regional markets.
There have been signs of overheating in China for a while. The Greek referendum came and went, and the markets responded with unexpected calmness but the meltdown in Chinese stock and property markets is another game altogether. “This applied on the way up when Chinese stocks rallied over 100 percent in the space of a year while economic growth was the slowest in six years”. At the same time, state-owned media has encouraged ordinary Chinese for months to load up on shares.
In a separate announcement, the stock regulator said CSF will provide liquidity for investors to buy so-called “public funds” – similar to a mutual fund.
As indicated by an estimate by HSBC, about 15 percent of the assets of Chinese households are locked up in the stock market. “What does CLP or Hong Kong Gas have to do with this?”, said Niklas Hageback, who helps oversee about $202 million at Valkyria. The growth in margin trading and other factors resulted in the authorities’ controls on stock prices becoming less effective and speculative price movements picking up in pace.
The consumer-price index increased 1.4 per cent last month from a year earlier, according to the National Bureau of Statistics. Investors are not afraid of losing money; instead, they hate to become victim of one-sided market intervention.
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. The fall comes despite – or perhaps because of – the Chinese regulators’ decision to ban major shareholders from selling their shares for the next six months. Hong Kong’s Hang Seng index rose 2 percent to 24,883.44 while Australia’s S&P/ASX 200 gained 0.6 percent to 5,506.00.
The market rise was fueled by factors that include new laws that made it easier for companies to be listed on the stock exchange, which then met with the huge influx of willing investors purchasing their shares. In this scenario, retail investors should adjust their portfolios and get rid of stocks without fundamental support.
“If the supposedly omnipotent Communist Party have shown such ineptitude with regard to stock markets, who’s to say the same thing won’t happen with the wider economy?” said Jasper Lawler, market analyst at CMC Markets.
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Foreigners own just 1 to 1.5% of Chinese shares and those that do are not allowed to sell short or can sell short only a tiny percentage of their holdings.
