Share Sell-Off Spreads to Hong Kong from China ; Beijing's Effort to Prop Up Stock Prices Has Limited Impact as Rout Continues

By Bradsher, Keith | International New York Times, July 7, 2015 | Go to article overview

Share Sell-Off Spreads to Hong Kong from China ; Beijing's Effort to Prop Up Stock Prices Has Limited Impact as Rout Continues


Bradsher, Keith, International New York Times


Beijing's efforts are failing to confine the damage to mainland markets.

Heavy government-coordinated purchases pushed up the value of large companies' shares on mainland Chinese stock exchanges on Monday, interrupting at least temporarily a three-week downturn. But shares in smaller and midsize companies, which make up as much as two-thirds of the market by value, kept falling.

A widening gap between the relative strength of large companies' shares and the seemingly unending slide in the rest of the market threatens to widen social divisions in China. Millions of working- and middle-class families invested their life's savings and borrowed heavily over the past year to buy shares in smaller companies, simply because the shares kept rising and almost regardless of the companies' financial fundamentals.

By contrast, Chinese and foreign institutional investors heavily favored the larger companies. Many of the large companies are partially owned by the state, and their executives are senior Communist Party officials who wield considerable political influence. Some large companies also have close ties to some of the country's leading political families.

With the Chinese government supporting the prices of many companies' shares on mainland markets on Monday, particularly large companies, it was the turn of Hong Kong-listed shares to fall heavily.

The Hong Kong stock market had previously been nearly immune to the sell-off on the mainland. It has tighter restrictions on trading with borrowed money and stronger corporate governance rules. So it did not rise nearly as fast as mainland indexes over the past year and until Monday had not fallen very far either.

But the broad Hang Seng index of Hong Kong stocks slipped 3.2 percent on Monday, the Hang Seng index of 100 large mainland companies dropped 3.7 percent and the Growth Enterprise Market of mainly small mainland companies plummeted 14.4 percent.

Andy Wong, a Hong Kong stockbroker, noted that it was much easier for foreigners to sell shares in Hong Kong in response to developments in mainland China than to sell shares on the Shanghai or Shenzhen stock markets.

The falling Hong Kong market "is mainly the result of the overseas players' offloading Hong Kong stocks in a big way -- they appear angry at the Chinese government for coming out to interfere in the China stock markets," he said. "Since they have no room to play up north, the overseas players have switched to playing the Hong Kong stock market today."

At a brokerage house in Hong Kong, investors were divided on how much to worry about the day's setback.

Some, like Wong Chun, a 72-year-old investor who has been trading stocks since the 1980s, were clearly worried. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Share Sell-Off Spreads to Hong Kong from China ; Beijing's Effort to Prop Up Stock Prices Has Limited Impact as Rout Continues
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    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.