The volatility in Chinese stocks has returned, particularly for large-cap stocks.
The benchmark Shanghai Composite index finished the session down 1.12%, snapping a 13% three-day winning streak, while the SSE 50 index, comprising the 50-largest firms by market capitalisation in Shanghai, was thumped, losing 3.68%.
As the chart below shows, while large cap stocks didn’t suffer declines as large as small-cap stocks during the recent market rout, their rebound has been less-spectacular as well.
Mirroring the decline in those indices, the CSI 300 index, that which encompasses the 300-largest listed firms in Shanghai and Shenzhen, slid 2.37%.
While large-cap stocks came under pressure it was a different story for small-cap stocks – they rallied.
The Shenzhen Composite, CSI 500 and ChiNex indices finished the session higher by 1.38%, 2.12% and 1.60% respectively. Given heavy government involvement in Chinese stocks in recent weeks, it’s clear that their efforts at present are directed towards supporting shares of smaller firms.