Biggest one-day fall in 8 years as Beijing support efforts falter. Active sales were caused by the general view that government measures to stabilize the stock markets fail. In addition to this information Financial Times adds that after 1990 a similar decline is seen only once and is now second.
The collapse is true for the other indexes. Shenzhen Composite tumbled – 7%. ChiNext with – 7.4%. Maximum allowable daily limit of – 10% reached China Life Insurance, Bank of Communications, China Shenhua Energy. Largest energy corporation PetroChina lost 9.6% of its value, while the largest commercial bank Industrial and Commercial Bank of China – 5,3%. Despite government intervention, Shanghai Composite continues to trade with a decline of over 28% compared to its record highs since June.
Nearly half of the total of about 2800 companies this month have suspended trading of its shares. Summary of today’s session of the Shanghai Stock Exchange fell 1,700 companies, while only 78 showed growth. The conclusions of the Financial Times is that despite the reported growth of 7% of the Chinese economy in Q2, market expectations are too negative.
All this, together with the possible limitation of support through the state, negatively and the other Asian markets. The negative sentiment was transferred today with European investors. The decline in trade in Europe interpreted as a direct response to renewed panic on the stock exchanges in China. New tremors of the Chinese stock market, will be followed by a decline in the commodities markets.
Starting today, participants in world markets will await with increased interest the results of the two-day meeting of the Federal Reserve, which will come on Wednesday evening, although not expected any change or clarification to increase interest rates in the USA in September.