After a huge dip on Monday, followed by more subdued trading the next two days, shares in China rocketed higher.
Not surprisingly, rumour and innuendo seemed to be driving the market more than anything else.
MarketWatch: China’s Shanghai Composite, which lost nearly 22% of its value in August, jumped 4.8% to 2845.02 for its strongest percentage rise since March 4. The Shenzhen Composite index climbed 5.5% to 956.69. The advance came in the wake of media reports citing a China Securities Regulatory Commission official as saying the regulator will promote steady and healthy development of the markets.
Analysts at RBC Capital Markets cited rumours that Class A-share initial public offerings will be suspended from mid-September to early October “to underpin shares and prevent oversupply,” as another reason for the rally.
Figuring out this market clearly requires its own form of Kremlinology, given the constant need to decipher comments from officials.
And this idea that an influx of new IPOs could be so huge so as to depress the entire market is a pretty wild thing to wrap your head around. It’s hard to belive it’s really true, though it speaks the lack of confidence anyone has in fundamentals or traditional valuatons.