That led investors to believe the government would ensure that stock prices gained.
The losses build on an 8.5 percent decline on Monday for the benchmark Shanghai index, its worst performance in eight years.
They say a picture is worth 1,000 words.
Li Pumin, secretary general of China’s National Development and Reform Commission, said the market volatility should not have a huge impact on the overall Chinese economy.
After a severe fall of over 8 percent on Monday in the Shanghai Composite index, which wiped off over $600 billion in market value, the country’s securities regulator announced that it would probe malicious share “dumping” and promised to buy more stocks in order to calm the market.
China’s efforts to rekindle investor enthusiasm for the stock market are gaining little traction as margin traders cash out and new equity-account openings tumble. The smaller Shenzhen Component Index fell 1.41 percent to close at 12,316.78 points, reported Xinhua. Shanghai shares fell a further 5 per cent on Tuesday, before rebounding to trade around 1.5 per cent lower. Could they have left the market forces alone to determine what the equilibrium level is?
Asian stocks fell to three-week lows on Tuesday morning, as a deepening rout in Chinese stocks erased risk appetite – sending investors flocking to safe-haven instruments such as government bonds and the Japanese yen.
In fact we expanded on that conundrum in this post discussing the exposure of U.S. automakers to the Chinese slowdown …
China stocks were mixed on Thursday after the report.
Hong Kong stocks ended 0.62 percent higher Tuesday, clawing back some of the previous day’s losses that came in line with a sharp plunge in Shanghai.
“There are a lot of different parts of the economy that are showing weakness and the collapse of the stock market is just another symptom of the fragility of the Chinese economy right now”. The Hang Seng Index was last up 0.9%, although a gauge of Chinese firms listed in the city remained down 0.5%. Expectations are split between September or December. The contract shed 75 cents on Monday to $47.39.
“Markets expect the central bank to withhold an interest rate hike this time around, putting the focus on the statement accompanying the announcement for further guidance”, said Ilya Spivak, a currency strategist at DailyFX.
However, insurer Ping An lost 2.44 percent to HK$46.00 and conglomerate China Resources fell 2.73 percent HK$21.40.
The euro was little changed at $1.1091 after surging to a two-week high of $1.1129 overnight thanks to a bullish Ifo survey of German business sentiment.