China is already trying to stop mirroring the 1929 Wall Street crash, which led to the Great Depression in the US in the 1930s, by getting it’s top stock brokerages to pledge to collectively buy at least 120 billion yuan (£12.3 billion, $US19.3 billion) of shares to help steady the market, with backing from the People’s Bank of China.
But now China just found a better and easier way — suspend the company’s stocks from being traded at all.
According to China’s official financial news outlet The Securities Times, picked up by the Financial Times and Reuters, the country suspended more than 200 shares. This brings the total amount of shares suspended to 651 since June 29, which is worth 23% of the 2,808 companies listed on the Shanghai and Shenzhen exchanges.
China’s stock market is around 30% lower than less than a month ago at 3,679.73. Today, as of 7:22 a.m. BST (2:22 a.m. ET) was down just over 1%.
It’s little wonder that the government decided to suspend stocks, to stop the market cratering further, as bank analysts predict that the crash is going to get worse.
On July 6, Citi analyst Jason Sun and his team said in a research note that Chinese stocks “still [have a] long way to go.”
Citi say: “Despite the sentiment help, we believe continued deleverage, and possible reform concerns given recent administrative intervention, will cap index upside. We estimate one-fourth margin buys forced out, still long way to go.”