More than half of the companies traded in China have elected to pull their shares as markets continue their insane roller-coaster ride, according to state media. The Shanghai Composite gained modestly on Monday, fell modestly on Tuesday, and then lost another 5.9 percent on Wednesday.
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While the stock market crash hasn’t been good news for China’s economy, it hardly means the economy’s finished.
There have been signs of overheating in China for a while.
Both banks believe that the slide which wiped €3.5 trillion in value from Chinese stocks had relatively little impact on earnings and real economic growth. Some big investors have borrowed money to speculate on these stocks, which may struggle to find liquidity as margin financing has come apart.
The Ministry of Finance vowed not to sell shares of listed companies amid “abnormal volatility” of stock market. Shenzhen was No. 5 with 112 deals that raised $7 billion.
China is also revealing to global investors that its markets aren’t fully developed, analysts said.
“Market sentiment has definitely reversed significantly and started to stabilise, so it’s safe to say that the state’s measures have won initial success”, said Phillip Securities analyst Chen Xingyu.
Tokyo stocks were down 0.69 per cent at the break, recouping earlier heavy falls.
But trading remained volatile.
As the losses have deepened, though, worries have increased and officials have taken direct action to stem the selling.
It’s actually made things worse.
Prices have been dropping for months in the face of the country’s growth slowdown, but the spot price of iron ore, a key export to China, took its biggest one-day hit ever overnight, falling 10 per cent to $44.59 a tonne – its lowest since May 2009.
The importance of the Composite lies in the fact that millions of Chinese citizens have invested large proportions of their savings in shares on the stock market.
Russian President Vladimir Putin said Chinese authorities were reacting “calmly” to events on the stock market.
With another round of margin calls forcing leveraged investors to dump whatever shares could find a buyer, blue chips that had been supported by stabilisation funds earlier in the week bore the brunt.
China’s economy, the world’s second largest, is already faltering. That could undermine the government’s effort to spread the use of the yuan worldwide and have it included in the global Monetary Fund’s special-drawing rights currency basket. The percentages, though, are small.
Before this, the stock market, however, maintained a slumping trajectory.
Few US investors own Chinese stocks, so the damage here may be limited.
Her experience illustrates how China’s novice investors tend to be the biggest losers in the event of a market meltdown.
The benchmark is still up 82 per cent in the past year, the most among the world’s major markets. “My sense is that they’ve been expecting something ugly from this retail frenzy that has been driving Chinese markets”.
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Over half of China’s stocks have completely stopped trading. Trading on the New York Stock Exchange was also disrupted by technical trouble that caused a shutdown lasting more than three hours. Regarding this question, it’s frankly too soon to tell.
