Chinese shares continued to depreciate this week despite taking unprecedented measures by the authorities to support capital markets. Regulators warn investors that have fallen into “alarmist sentiments” and more companies are trying to avoid the collapse of its capitalization by stopping the sale of shares, writes Reuters.
In recent weeks, Beijing has taken a fall in interest rates and other measures rahlabvane monetary policy and the central bank announced schemes which indirectly credited equity trading through brokerage houses. Earlier this week, these actions have supported the shares of the largest companies, but high debt causes investors to sell at any price.
“I’ve never seen such a collapse of the market. Liquidity is completely exhausted. Initially, many investors wanted to hold the shares of large companies. However, having so many small companies went out of the exchange, the only way to reduce risk is to sell and blue chips” said Du Changchun, an analyst with Northeast Securities.
Index CSI300, which includes the largest companies listed on the stock exchanges in Shanghai and Shenzhen, fell 7.1% on Wednesday. Shanghai Composite index itself retreated 6.3 percent. Only in the last trading day 500 companies announced suspension of trading in their shares, bringing the total number to 1300-45% of all companies listed on the stock exchanges. Thanks to this index ChiNext, comprising mainly small companies fell by a moderate 1% on Wednesday.
From mid-June, shares of Chinese markets have lost about 30% of its value. That leads some analysts to fear that this will lead to stroke and on the real economy, which can become a greater risk of the eurozone crisis. “The effects of the adjustment of the market has yet to occur. We expect the economic slowdown, reduced corporate profits and a higher risk of financial crisis,” said analysts from Merrill Lynch.
The collapse of the capital market, which had doubled in value last year, represents another major problem for the political leadership of the country. The second greatest economy already suffering from growth retardation to the lowest levels of two decades, as well as the problems associated with high internal zalazhnyalost. Coercive interventions Beijing market question and liberalization measures that were central to economic reforms envisaged.