The state also banned large companies to come up with new issues, which slowed down trade.
Brokers who borrowed money to small stock investors have so far thrown gasoline on the fire by calling the loans. Small investors have been forced to sell at a loss and pushed the panic. It will not have those now, since a state company promised to support brokerages with loans.
All to stem a stock market falls that cut more than 20 percent of the Shanghai Stock Exchange’s value in just a few weeks.
Monday was still a violent roller-coaster ride: First, the rise of 8 per cent in just ten minutes, then down to minus during the day, and in the end just the government sought: 2 percent when the stock market closed this morning Swedish time.
– In practice, now the state has placed a floor for the stock market on a stock index around 4-4500, says Frédéric Cho.
Many Chinese had hoped that China would come up with in the international MSCI index – a kind of seal of approval that the stock market is ripe for more international trade. But the state’s actions show that China’s stock market is far from a free market.
– Millions of Chinese people have jumped on the popular movement to play on shares, and the state can not allow a total crash. The Communist Party prioritize social stability, everything else is secondary, says Cho, who nonetheless warn against further cases.
– China’s shares are still sky high valued. Higher than is sustainable unless the economy puts a higher speed.
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