The stock markets in China yesterday suffered the largest drop since 2007 with a drastic drop of 8.48% to 7.59% Shanghai and Shenzhen, just two weeks after starting to recover from its worst month in which They came to losing a third of its value. The fall came despite the measures taken by the Chinese government to prop up the market and its effects were felt across the globe.
The upheavals in the Asian giant was such that more than half of companies listed on the two-seater, with values cited more than 1,600 companies listadas- losses reached 10%, the maximum daily variation that allows the Chinese stock market regulations.
The reason seems caused the crash is the announcement of the National Bureau of Statistics that the benefits of China’s major industrial firms had fallen 0.3 percent year on year in June, in stark contrast to growth of 0.6 percent recorded in May. But according to analysts, the stock market crash is also linked to the bubble in the housing market and the associated loan system that erupted two weeks ago.
Until mid-June, the Shanghai stock market had accumulated a rise of 150% in twelve months, a development totally disconnected from the real economy, slowed. Shanghai in the process lost a third of its value. The government responded with a series of measures, including the ban on some 100 major Chinese groups to sell shares of its subsidiaries on the stock exchange. The package took effect temporarily. The stock rose again strongly in the past two weeks, a move that has just finished now with the publication of poor indicators. “The rise in the last two weeks was very strong, and the market has corrected itself,” said Zhang Di, an analyst at Haitong Securities.
Following losses then, the authorities and the bank Central Asian country intervened to prevent deplome. The latter injected 35.000 billion yuan in early July, while new IPOs is prevented and the price of up to 1,400 companies in the stock markets was suspended.
From the lowest level reached on July 8, the Chinese markets had managed to recover in the last three weeks. However, investors now fear that the measures taken by the government have no long-term effect.
But the real problem is not only in the markets but also in the progress of the Chinese economy, which for some time has been slowing its growth. Chinese economic data caused a growing nervousness within and outside the country. One indication of this process gave it yesterday in Beijing Bureau of Statistics reported that when the profits of large Chinese companies had fallen in June by 0.3 percent from the same month last year.
the importance of the stock market and the Chinese economy is growing, the Shanghai and Shenzhen quake was felt around the world in both equity securities, and commodities. The Stock Exchange of Hong Kong fell 3.09%; Tokyo 0.95%; and Seoul 0.35%. Wall Street closed with a 0.73% lower and the same Europe: London (1.13%); Frankfurt (2.56%) and Paris (2.57%). Oil lost 1.56% in New York (the barrel closed at US $ 47.39) and in London by 2.1% (US $ 53.47 per barrel). Other commodities such as soybeans, also fell (See A cycle …..)
Last night, the communist government tried to bring peace and said the National Securities Commission will continue to buy shares to stabilize markets, as reported by Xinhua news agency, quoting Zhang Xiaujun spokesman regulator. The decision was made to clear “rumors” that the commission “failed to stabilize the stock market,” said Xinhua, after the worst stock market crash in eight years
Source:. Agencies
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