Stock trading stamp tax at record high

The impact on Chinese investors is direct, but for investors in the US, Europe and elsewhere, it’s not as simple.

There have been signs of overheating in China for a while. Whether or not these problems compound to a hard-landing for China’s economy remains to be seen, but the consensus view is that these problems could cause the growth rates to slow down in China over the coming years. ZTE Corp. surged 7 percent. It must do more to ensure that banks extend loans and credit more efficiently.

Rising stocks encouraged companies to raise money by issuing shares and to use the proceeds to pay down debt.

For the day, the index advanced 17.47 points or 0.46 percent to finish at 3,823.18 after trading between 3,688.44 and 3,877.51 on turnover of 569.9 billion yuan. The bear-market rout has prompted the government to unveil a raft of measures to stabilise equities as traders unwind margin bets.

This would be the first positive indication since China stocks began their free-fall on 12 June 2015.

An April 21st commentary on the market in the People’s Daily newspaper, the official outlet of the Communist Party, urged investors to get into the market and rubbished fears of a bubble because, the commentator said, A-shares were great Chinese companies, “not tulips or Bitcoin”. The European markets were slightly higher and the US bourses were barely lower, so the Asian markets are looking at a fairly flat lead.

“Investors were awaiting further hints for direction and anticipating new stimulus from the government”, said Steven Leung, a director at UOB Kay Hian in Hong Kong. Hong Kong’s Hang Seng China Enterprises Index slid 0.7%, while the Hang Seng Index dropped 0.4%.

About three stocks gained for each one that fell on the Shanghai Composite Index, which slipped 0.1 percent to 3,801.25 at 10:04 a.m. local time.

They should accumulate some strong second- and third-tier stocks, in particular those that may benefit from policy support or could introduce some powerful shareholders.

Peter Cardillo, chief economist at Rockwell Global, a brokerage firm, thinks the Greek crisis may still spook the stock market. Unlike in the US, Chinese companies tend to access capital through bank lending rather than through equity markets, though the Chinese government is trying to encourage greater equity market capitalization via reforms.

For example MSCI, a company which publishes stock indexes, made a decision last month not to include Chinese “A” shares, or stocks traded on the mainland, in its global indexes.

Here’s a look at what’s been going on in China and how it’s affecting mutual-fund investors.

If you have a 401(k) or IRA, odds are good that you have at least a sliver of your savings in Chinese companies. Indeed, the size of the Chinese stock market relative to China’s gross domestic product (GDP) is fairly small. Shenzhen stocks lost 40 percent in less than four weeks.

Media reports have also showed that several other villages, such as one in Dongyang County, Zhejiang Province, are also into the stock market. It’s been a popular area, with more than $13 billion flowing in this year, and Chinese stocks can make up about a quarter of these types of funds.

That said, I would always encourage investors to focus on the long term and it should be remembered that China’s transition is a multi-year, perhaps even a multi-decade, story.