Chinese shares continue to plunge as confusion reigns
Investors do not know if government efforts to prop up the market have ceased.
Nevil Gibson talks about China on NBR Radio and on demand on MyNBR Radio.
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UPDATED: Chinese shares fall for third day
Shares on Chinese stock exchanges fell again in early trading today as investors gained no lead on the immediate direction of the market.
The main Shanghai Composite dropped 3.8% within the first hour but has since recovered slightly. The Shenzhen market was down 5.2% before it, too, bounced back a little, while the ChiNext for new stocks is off 5.1%.
Signs of government purchases that were prevalent in recent weeks went missing in Monday’s rout, when the Shanghai Composite fell 8.5% in the biggest one-day drop in eight years.
The plunge was surprising because it followed a government rescue package that had helped drive a 16% rally since July 8.
But PetroChina, long considered a favourite holding of state-linked rescue funds, sank 9.6%, just short of the 10% limit.
The government-run oil producer had been one of the biggest sources of support for the Shanghai Composite on big down days in late June and early July.
After the close of trading, the securities regulator denied speculation that the government had exited the stock market.
A spokesman for the China Securities Regulatory Commission denied the China Securities Finance Corporation, a state-backed agency that provides margin financing and liquidity, had withdrawn support for equities.
Support buying appeared to vanish without warning, leaving analysts guessing whether authorities shifted their policy stance or just got overwhelmed by a flood of sell orders.
The commission will “continue efforts to stabilise market and investor sentiment, and prevent systemic risk,” the spokesman said.
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Nevil Gibson
Tue, 28 Jul 2015
Tue, 28 Jul 2015
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Chinese shares continue to plunge as confusion reigns
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