Chinese shares gyrated yesterday, sinking to five-year lows, after stock market regulators sought to reassure jittery investors with a promise to crack down on stock price manipulation and “malicious short selling.”
Shares in Shanghai and the smaller market in Shenzhen, near Hong Kong, swung between big losses and small gains throughout the day. The markets have languished on the heavy selling of property shares that have suffered with a slump in the real-estate market.
Market observers said there were signs the authorities had, as is often the case, ordered big institutional investors to step up buying of state-owned banks and other heavyweights.
Photo: AP
However, shares still mostly lost ground on worries about China’s economic outlook, with traders unmoved by authorities’ pledges of support for markets.
Propping up the market with cash cannot be sustained and would not provide a lasting turnaround as long as the property sector remains weak and a weight on consumer and investor confidence, analysts and investors said, adding that the task is also massive: Chinese stocks are worth about US$9 trillion.
The main index in the smaller market in Shenzhen sank 4.4 percent, but then rapidly recovered, bouncing between losses and gains and closing 1.1 percent lower. The Shanghai Composite Index slipped 3.5 percent at one point and closed 1 percent lower, at 2,702.19 points.
Hong Kong’s Hang Seng Index slipped 0.15 percent, or 23.55 points, to 15,510.01 points.
Wilder swings were also seen on the CSI 1000 which fell as much as 8.7 percent yesterday before regaining some of the losses to close down 6.1 percent. The CSI 1000 is often used to track so-called “snowball derivatives,” which offer big gains, but also could result in exaggerated losses.
Chinese companies have lost billions of US dollars of market value as investors shifted away from the markets in Hong Kong and China in search of better returns.
The China Securities Regulatory Commission on Sunday said it would redouble enforcement of measures against crimes such as market manipulation and malicious short selling, while guiding more medium and long-term funds into the market.
That move followed other support measures such as restrictions on short-selling or reductions in trading duties in the past few days that appear to have done little to reassure investors who have been pulling money out of the markets for months.
Comments by former US president Donald Trump that he might impose a tariff of more than 60 percent on imports of Chinese goods if he is re-elected also hurt market sentiment.
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