Newspaper article International New York Times

Despite Push by China, Stocks Turn Downward ; Indexes Drop about 5% as Government Measures Are Ignored by Investors

Newspaper article International New York Times

Despite Push by China, Stocks Turn Downward ; Indexes Drop about 5% as Government Measures Are Ignored by Investors

Article excerpt

Mainland indexes fell about 5 percent after gains the previous day, despite government reassurances that the stock markets are strong.

China's stock markets plunged in the final hour of trading on Wednesday, as a series of government measures on Monday night and through the day on Tuesday to prop up share prices once again proved to have little enduring effect.

The Shanghai and Shenzhen markets had seemed to recover on Tuesday afternoon and Wednesday morning after Chinese government agencies, companies and trade groups issued upbeat statements. The Chinese Finance Ministry said that it might allow the national pension fund to buy stocks, the China Securities Regulatory Commission denounced "irresponsible rumors" of market weakness and the government-affiliated Asset Management Association of China declared that a "structural rally is brewing."

Some analysts detected possible signs of large-scale, coordinated buying late Tuesday afternoon by state-controlled enterprises. Guotai, one of China's biggest brokerage firms, talked of plans to make it even easier for investors to trade stocks with borrowed money.

But by Wednesday afternoon, none of these measures seemed to have persuaded investors that now is a good time to own Chinese stocks. Share prices wilted, as waves of selling pushed the Shanghai stock market to a 5.2 percent loss and the Shenzhen market to a 4.8 percent decline.

With a handful of exceptions, Chinese regulations do not allow the price of a company's shares to fall more than 10 percent in a single day. So losses as large as Wednesday's are a sign that some listings fell to the limit and may fall further on Thursday.

Wednesday's decline represented the second time in three days that government measures to shore up support for the stock market failed to have a lasting effect. After the Shanghai and Shenzhen markets each fell more than 7 percent on Friday, China's central bank reduced interest rates late Saturday for one-year bank loans and deposits by a quarter percentage point and told banks that they could hold less of their deposits as reserves, freeing them to lend more.

But after rising in the first hour of trading on Monday on the Chinese central bank's action, the Shanghai and Shenzhen markets both descended into bear markets later in the day, with prices more than 20 percent below their high on June 12. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.