After yesterday’s enormous plunge of 8.5%, Chinese stocks have endured another wild session today.
Stocks finished modestly lower, having gyrated wildly from one direction to another throughout.
The benchmark Shanghai Composite index, yet again, has been right in the thick of the action. Having opened down more than 5%, the index staged a remarkable mid-session rally, briefly breaking into positive territory before meandering lower over the course of afternoon trade.
Eventually the index closed down 1.68%.
Today’s wild intra-day swing is a continuation of the volatility seen in recent sessions. From Friday’s high to today’s low, the index lost 15.5%, or 650 points.
That’s a technical correction, closing in on the establishment of a full-blown bear market, in the space of just two-and-a-half sessions.
Such is the push-and-pull factors tugging at the index at present.
Unsurprisingly, the volatility seen in Shanghai was mirrored by other mainland indices.
The SSE 50 index, comprising the 50 largest firms by market cap in Shanghai, finished down 0.32%. While another decline, the fact it came close to finishing flat was no mean feat given it was down around 3% shortly after the market opened.
Elsewhere the CSI 300 and 500 indices, containing the 300 and 500-largest firms in Shanghai and Shenzhen, lost 0.20% and 1.85% respectively. Like the movements seen in Shanghai, the latter had been off more than 5% earlier in the session.
Small cap stocks, compared to their larger compatriots, saw heavier losses for the session. The Shenzhen Composite and tech-heavy ChiNext index finished with losses of more than 2 and 3% respectively.
Overnight the CSRC, China’s stock market regulator, announced that it would step up efforts to underpin the market. The PBOC, before trade got underway, also injected 50 billion yuan into the nation’s financial system, the largest increase seen since July 7 this year.
While stocks closed weaker, given they were down significantly earlier in session, it appears that policymakers in Beijing had limited success in stemming the market losses, at least compared to the carnage witnessed yesterday.
However, with investor sentiment frayed and form on the board, one cannot rule out the possibility of further supportive measures being rolled out tonight in order to buttress the market from further losses.
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