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It was another crazy session for Chinese stocks on Tuesday

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Having plunged by 7% on Monday – closing the session early on the same day market circuit breakers were introduced by regulators – Chinese stocks endured another wild session on Tuesday, swinging between losses of over 3% to gains in excess of 1% throughout the course of trade.

However, after all the chaotic price action, stocks eventually finished mixed.

The benchmark Shanghai Composite index slid 0.3%, recovering from a more than 3% plunge on the open, while the CSI 300 – an index comprising the largest listed firms in Shanghai and Shenzhen – closed with a modest gain of 0.3%.

Small cap indices such as the Shenzhen Composite, CSI 500 and ChiNext closed with losses ranging between 1.34% to 3%.

While there was no definitive reason to explain the wild price action, there were several key factors that helped to minimise losses during the session.

Before the start of trade China’s stock market regulator, the CSRC, stated that it was reviewing whether to regulate share sales by major shareholders and executives of listed companies, hinting that it may restrict the proportion of shares they can sell during a given period of time.

Concerns that a ban on large shareholder sales would be lifted by regulators later this week likely contributed to the sharp sell off in stocks yesterday.

There was also a sizeable liquidity injection offered by the PBOC with the bank pumping 130 billion yuan into financial system via the repo market.

There were also rumours that China’s so-called “national team” – a collective group of state-backed financial firms entrusted to buy stocks during times of market upheaval – may have also been active in the markets.

Supporting this rumour, large-cap stocks – those traditionally favoured by the national team – outperformed their smaller peers during the session.

The SSE 50, an index comprising the largest 50 stocks by market capitalisation in Shanghai, outperformed all other indices, rallying 0.8%.

While all three provided short-term support to the markets today, whether that remains the case over the longer-term is debatable.

Here’s the final Asian scoreboard for Tuesday.

Stocks

  • ASX 200 5184.43 , -86.04 , -1.63%
  • Nikkei 225 18374.00 , -76.98 , -0.42%
  • Shanghai Composite 3287.71 , -8.55 , -0.26%
  • Hang Seng 21198.29 , -128.83 , -0.60%
  • KOSPI 1930.53 , 11.77 , 0.61%
  • Straits Times 2824.21 , -11.76 , -0.41%
  • S&P 500 Futures 1274.12 , -13.89 , -1.08%

Forex

  • USD/JPY 119.26 , -0.16 , -0.13%
  • USD/CNY 6.5182 , -0.0156 , -0.24%
  • AUD/USD 0.7204 , 0.0016 , 0.22%
  • NZD/USD 0.6732 , -0.0017 , -0.25%
  • AUD/JPY 85.91 , 0.04 , 0.05%
  • EUR/USD 1.0811 , -0.0018 , -0.17%
  • GBP/USD 1.4711 , -0.0004 , -0.03%
  • USD INDEX 98.913 , 0.0440 , 0.04%

Commodities

  • Gold $1,076.86 , $2.56 , 0.24%
  • Silver $13.98 , $0.13 , 0.92%
  • WTI Futures $36.73 , -$0.03 , -0.08%
  • Copper Futures ¥36,720 , ¥450 1.24%
  • Iron Ore Futures ¥324.50 , ¥1.00 , 0.31%

10-Year Bond Yields

  • Australia 2.793%
  • New Zealand 3.505%
  • Japan 0.256%
  • Germany 0.573%
  • UK 1.896%
  • US 2.243%

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