World’s strictly regulated economy- China is undergoing a rare market experience over the last fifteen days. Its stock market is falling steeply. Most surprising and worrisome is that the market is not obeying government’s effort to block the decline.
The Composite Shanghai index has fallen by 1.8% on Tuesday, July 7, reversing the slight gain made on the previous day.
China’s stock market has grown by 117% in the last eight months before June. From mid June, the index has fallen by nearly 30 percent.
Later, the government has introduced many market stabilization measures but the stock prices scooped down after looking at government signals for one day.
China’s stock market crash has renewed crisis tracker’s attention to Asia’s largest economy for the time being, away from Greece.
Many analysts have voiced that for the world, big problem in Greece is smaller compared to small problem in China. The scale matter and the people are curiously watching how the stock market in China is going through an independent path, disobeying policy makers’ signals in a strong centralized economy.
China is going through a critical year this year as growth rate has declined and more than that it is coming down quickly.
Regarding the present crisis, downward correction trends from the huge gain in valuation early this year and liquidity shortages with investors are considered to be the main reasons for the steep fall.
Chinese media reported that major native insurance firms have purchased huge volume of blue chip securities to save the market on Monday.