The stock market’s steep fall continues in China despite many precautionary measures by the Chinese central bank. Leading index the Shanghai Composite is down by 4.7%, recovering from an 8 % scoop early in the day. The fresh faults are despite stopping of trade in nearly 50% of the listed companies.
Earlier, 1476 listed companies have stopped their trading in the exchanges. Hong King’s Hang Seng lost 5.8% while the Nikkei of Japan has lost 3.14%.
The Indian market that surprisingly withstood the Greek shock on the previous day seems to be deeply affected by the Chinese burst. Mid day, both Sensed and Nifty lost around 1.9%.
Sensex and Nifty plunges following the Chinese burst
In India, the Sensex and Nifty have also recorded steep fall by around 1.90 % as trading goes on. The Sensex lost nearly 500 points while the Nifty fell by 150 points mid-day. The inability of the c Chinese central bank to contain the market fall seems to be affecting the Indian market also as India is peer to China in market sentiments.
The ultimate effect of the Chinese burst will be clear only by the end of the day.
Official supports goes in vain in China
The continued efforts of the central bank in China is not helping to arrest the free fall of the stock prices. Experts rather questioned the logic of stopping of trade in nearly 50% of listed companies as a negative warning. It may have developed panic in the market as the existing holders running away with whatever they have in their hand.
What is more shocking about the Chinese burst is that the otherwise centrally administered economy is not able to overcome the negative trend despite strong central bank measures.
Beijing has responded with more measures to steady the market on Wednesday. The People’s Bank of China has provided liquidity to the state-owned China Securities Finance Corporation to help the fund “hold the line against the outbreak of systemic or regional financial risk”.
Earlier, the official stand was to avoid crash in blue chip companies. But all those measures seem to lose their direction amidst panic selling. Burst trends are also engulfed the Hong Kong share indices.