The rollercoaster that is China’s stock market continued on Monday, following fresh attempts from authorities to stem the losses and reduce the wild volatility in trade.
After initially opening up more than 8.5% the CSI 300 index, that which comprises the 300 largest firms listed from the Shanghai and Shenzhen exchanges, has closed the morning session up 2.52%. On Friday the index slumped 5.4%, taking its losses from June 9 to 27.76%.
Elsewhere the Shanghai Composite, having opened up 7.82%, is up 2.16% while the Shenzhen Composite, after opening up by more than 6.5%, has slid into negative territory with a decline of 2.52%.
The ChiNext index, which comprises a raft of technology companies and is nicknamed China’s “Nasdaq”, has been obliterated yet again. After surging close to 10% upon the market open it has tumbled 4%, taking its losses from June 5 to 38%. At one point earlier in the session the index was down by more than 5%, taking its total intraday trading range to more than 14%.
That’s not a misprint. It’s actually happened. An intraday swing of close to 15%. An utterly crazy move.
In recent weeks Chinese regulators and policymakers have ramped up their efforts to support Chinese stocks, despite all major Chinese indices posting gains of more than 70% over the past 12 months.
In late June China’s central bank, the PBOC, cut interest rates by 0.25% and reduced the amount of cash reserves required to be held by some Chinese banks by 0.5%. Having failed to put a floor under market losses, China’s stock market regulator, the CSRC, banned short selling from some market participants and announced an investigation into potential market manipulation. China’s Ministry of Finance also announced that it will allow its basic endowment pension fund to invest a greater proportion of its funds under management into the nation’s stock market.
Alas, the markets continued to slide. All of the major indices posted weekly losses of 10% or more.
On Saturday further measures were announced to support the market. China’s top brokerages pledged that they would collectively buy at least 120 billion yuan ($US19.3 billion) of shares to help steady the market, and would not sell holdings as long as the Shanghai Composite Index was below 4,500 according to a report from Reuters. The CSRC also announced that they had temporarily halted IPO listings, something that had drained liquidity from the markets as investors sold down existing stock holdings in order to fund new share purchases.
Still, despite throwing everything bar the kitchen sink to support the market it is clear the announcements have done very little, or in some cases nothing, to shore up frayed investors sentiment.
The question now is what will happen if the selloff seen this morning continues later today, or indeed the remainder of the week.
The mind boggles as to what may arrive next. According to this tweet from noted China market watcher George Chen it may be a total ban on share sales from China’s massive social security fund.
You can follow George on Twitter here. Chinese markets will resume trading at 3pm AEST.
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