Shanghai stocks up more than five percent in afternoon

Short-selling is the selling of stock a trader does not own, in anticipation of a future fall in prices.

Reflective of the positivity in mainland Chinese markets, along with significant short-covering, Hong Kong’s Hang Seng, after plunging almost 6% on Wednesday, is up by 3.71% shortly before the close.

As the China Securities Regulatory Commission (CSRC) prepared to announce the ban, another 660 Chinese companies were allowed to suspend trading in their stocks, bringing to more than half the proportion of stocks on the Shenzhen and Shanghai markets that are suspended from trading. Asian stocks markets were volatile on Thursday as China’s main index seesawed after a p…

The Shanghai Composite Index’s sell-off took a break on Thursday as government efforts to prop up the market pushed shares up 5.8 per cent, the biggest one-day gain in six years. Instead of stabilizing the market, they could add to the selling pressure by transferring it to other shares that remain active. Separately, major shareholders of top Chinese banks including ICBC and companies including Sinopec pledged to either maintain their holdings or increase their stakes in the companies.

“Government support policies have shifted from saving the blue-chips and large cap stocks to focusing on growth stocks and smaller shares, which boosted trading volume and liquidity”, he said. Many of these new investors had less than a high school education.

The United States administration has expressed concerns the stock market crash could delay Beijing’s economic reforms. “If Chinese consumers stop spending, then all the products the world sells to them will no longer be bought, and that could impact the fundamentals of the global economy”.

Investors worry that a shock to the world’s second-largest economy could have broad repercussions, weighing on demand for goods and services broadly, and pinching global companies that are closely tied to Chinese growth. Those resorting to margin trading would have suffered huge losses amid the recent selloff.

Last month the Chinese central bank cut interest rates and eased some banks’ reserve requirements in order to put a floor under the stock market’s rout. The smaller Shenzhen Composite is down around 40% over the same period. The market turmoil is rattling neighboring markets. It fell as much as 3.81 percent and rose up to 6.88 percent during the day, representing a swing of more than 10 percent.

Even though USA investors have limited exposure to China’s market, there is still money there. The sell-off was so bad that more than 1,200 companies halted trading to prevent investors from selling their shares.

“Investor confidence is recovering”, Zhang Gang, an analyst from Central China Securities, told AFP.

“Fundamentally, China is coming back to a point of attraction – the monstrous P/E ratios have come back to more realistic levels”, Evan Lucas, market strategist at IG in Melbourne, wrote.

Anyone who was upset about the decision last month is now “probably thinking what a bullet they dodged”, said Every.

TOKYO: Most Asian shares recouped early losses and rose today as battered Chinese markets rebounded, while the safe-haven yen was pushed off highs scaled against the dollar.

History suggests that won’t be a cure either.