Shares on the Shanghai Stock Exchange

Shares on the Shanghai Stock Exchange fell by over 8%, which is the largest one-day drop of more than 8 years, reported Reuters. Stock index CSI300, which tracks the largest public companies in Shanghai and Shandzan, tumbled 8.6 percent to 3818.73 points on Monday. Meter Shanghai Composite Index lost 8.5 percent to 3725.56 points. This is the largest one-day drop since February 27, 2007
Efforts without result
In the last month and a half in China stock markets are tumbling, and Beijing has adopted unprecedented steps to try to stop it. State support large-scale purchase of shares, including from private investors, but now does not lead to lasting positive result.
“The lesson from the last equity bubble in China is that once attitudes have deteriorated, political interventions aimed at controlling prices have only short-term effect,” say analysts from Capital Economics.
It was not immediately clear what caused serious disruption during trading on Monday afternoon (local time) after noon decrease in both the index was about 2.5%. As a result of the collapse of stocks fell 2247 companies, shares rose just 77.
“The last rebound index was quick and strong, so there is need for a technical correction,” said Ian Hay, strategist at Kaiiyuan Securities. He believes that the shutter button is “half-hearted US market in anticipation of a more active policy of the Federal Reserve in the fourth quarter.” This combined with the rising price of pork in China increased fears that Beijing will refrain from further loosening of monetary policy, says Nye.
According to three unnamed sources from the banking sector, quoted by Reuters, the state-controlled finance company lending margin trading China Securities Financial Corporation (CSFC) returned early some of the loans they had taken to stabilize the capital market. The information sheds some light on the reasons for the sharp decline of markets on Monday, underlining investor fears that Beijing’s commitment to support the market may be weakening.
Worse data
The mood among investors has worsened because the official data released on Monday showing that profits of industrial companies in China fell by 0.3 percent in June from a year earlier. In May, profits of companies in the sector grew by 0.6%.
This increases the pressure on the Chinese economy after data late last week showed that in July the country’s manufacturing sector shrank the most in 15 months. PMI index dropped from 49.4 points in June to 48.2 points prior in July. Limit of 50 points separates contraction from the increased activity.