Chinese shares continue to plunge
Heavily leveraged investors are quitting as authorities try to prop up the market.
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Hawke’s Bay
China’s sharemarket plunge continues, with the main stock exchange down a further 1.3% and dragging Hong Kong down with it.
The drop is despite a range of moves by Chinese authorities to stem the slide and restore market confidence.
The Shanghai Composite fell 1.3% on Tuesday to 3727.12, putting it down 27.9% from its peak in mid-June.
Chinese authorities have set 4500 as a target and have lent money to sharebrokers to achieve it.
Other measures aimed at boosting shares include suspension of initial public offerings, lifting quotas for foreign investors and providing funds for buyers.
China’s smaller Shenzhen stock market fell for the second straight day, putting it down 5.3% for the week while the ChiNext board, composed of smaller cap stocks, dropped 11.2% to 2352.01.
Both indexes are off more than a third from June highs.
Hong Kong’s market also sank, with the Hang Seng Index falling 1% and a gauge of Chinese companies listed offshore in the city, known as H-shares, falling 3.3%.
This fall in H-shares of more than 20% compared with highs reached in May.
Losses in the trillions of dollars
Investor losses since the slide began three weeks ago have reached an estimated $US2.4 trillion.
The Chinese market is dominated by private investors, many of whom have borrowed heavily to buy shares.
Margin calls on these loans have fuelled the collapse in small cap shares, as investors liquidate their holdings, and this hinders efforts to persuade buyers into the market.
Companies are reacting by suspending their shares: 514 stocks in Shenzen and 162 in Shanghai.
Despite the rout, Shanghai shares are up 81% over the past year and 15.2% since January.
World markets are feeling the effects in commodity prices.
Oil plunged the most in a day on Monday in more than three months, though this was moderated on Tuesday with Brent crude gaining 1.6% to $US57.43 a barrel.
Nevil Gibson
Wed, 08 Jul 2015
Wed, 08 Jul 2015
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Chinese shares continue to plunge
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