When at first you don’t succeed, try, try again. And then again.
That’s likely to be the mindset adopted by Chinese policymakers again this evening after watching the nation’s stock market continue to dive despite a mammoth list of measures engineered to produce the opposite.
The benchmark Shanghai Composite index slid a further 1.26%, taking its losses to 28% since hitting a June 12 high of 5178. While the index closed in the red, there were huge divergent performances across the various sectors. Financials surged close to 4%, while healthcare and and materials slumped more than 6%.
While the broader index finished lower, the Shanghai 50, an index of the largest listed firms by market capitalisation in Shanghai, finished with a gain of 2.33% having been down more than 5% earlier in the session. With all the talk of pension funds, brokers and insurers buying stock to support the market, it’s clear where their funds are being directed.
Elsewhere the CSI 300 index, the 300 largest firms listed in Shanghai and Shenzhen, slumped by 1.76%.
While larger-cap stocks suffered modest losses compared to recent days, that wasn’t the case for smaller Chinese stocks. The CSI 500 was smashed, losing 6.5%, while the Shenzhen Composite, Shanghai’s namesake to the south, slid 5.4%. The tech-heavy ChiNext index in Shenzhen closed down 5.7%, taking its total losses from early June to 42%.
Here’s the chart of the ChiNext:
Clearly, despite some targeted buying in the nation’s largest listed firms, the measures announce to support market sentiment are doing anything but at present.
We look forward to what additional measures policymakers come up with next.
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