The Chinese shares fall again despite state support
The Chinese investors do not They have regained confidence in the markets
stock of the country despite the comprehensive package of measures launched by the
authorities from Monday. Liquidity injections and program
purchase of securities of large state companies saved the first session
of the week, but on Tuesday the Shanghai Composite Index returned to the
Red numbers and yielded 1.3%. In Shenzhen, where even yesterday
managed to stop the losses, the stock went into free fall and left a
5.8%.
About a quarter of the nearly 2,800 companies listed on
Both parks (about 650) have suspended the exchange of their titles
will avoid further losses, and they asked 200 Tuesday, according to the
local newspaper Securities Times. The shares of large state companies
They are the ones that are held artificially being the objective of
purchase program, but the rest are watching the value of their shares
falls daily and there is no prospect of improvement. The debacle has meant the loss
2.9 billion in market value in just three weeks,
which is more than the GDP of the United Kingdom.
“The market will continue to fall in the short term because most actions
small caps are still overvalued. The government is
shooting at the wrong target and investor sentiment is
deteriorating. There are no clear expectations or trust or faith necessary ”
Oliver says Rui, a finance professor at the business school CEIBS, which
It argues that the support measures by the authorities are not sufficient to
reverse the downward trend. Both parks had gained more than
150% last year, driven more by the increasing belief
investors that the securities continue to rise than economic fundamentals.
In fact, the Chinese stock markets touched highs just as the second
world economy grows at lower rate of the past 25 years and benefits
They reduce business year after year.
The big losers of this decline are the same that led to the
Bubble formation: the more than 90 million small investors
They put their savings in the stock market attracted by high profitability, the vast majority
of which have only school graduate and have
financial literacy. Many decided to borrow to buy more
titles before the uptrend, which explains the general stampede in
time when the stock began to plummet three weeks ago.
The tradition of prudence of much of Chinese society, however,
You can mitigate the effects of this debacle on the real economy. According To
official statistics, stocks only represent about 8%
household wealth in China compared with 20% in countries
developed, so the impact of a continuous and general decline in the
real economy would also be more limited. Still, it remains to be seen how many small
Investors will scalded this episode, something that will depend on how
long and bulging is falling, something that no one dares to predict. “This
upward trend has been encouraged by the Government to reduce costs
capital encourage innovation and deepen economic reform. For
Unfortunately, this initiative has been kidnapped by a group of investors
greedy individuals who have borrowed heavily. Now everyone in this
kind of casino that is the Exchange must pay the price to understand the power
market “, says Rui.
Country
Posted on Tuesday, July 7, 2015
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