China's
share market nose-dived again today plummeting 8.48 per cent to an
eight-year low as investors unnerved by the weak economic data on the
world's second largest economy dumped their shares to lock in profit
despite frantic government efforts to arrest the slide. After a brief
rally last week following the USD 3.2 trillion slump, Chinese shares
plunged again by 8.48 per cent. It was the worst single-day loss in
eight years. The benchmark Shanghai Composite Index plunged 8.48 per
cent to close at 3,725.56 points, in the sharpest daily drop since
February 27, 2007. The smaller Shenzhen Component Index fell 7.59 per
cent to close at 12,493.05 points. Nearly 2,000 shares fell by the
10-per cent daily limit. The plunge ended a six-day rally following
government's concerted efforts to arrest the freefall that wiped
nearly a third off the value of the market since mid-June.
"Historically, it takes time to restore market confidence after
such a long period of sharp decline. The market is expected to linger
at the bottom for a while before it can stage a sure rally,"
China Southern Asset Management Company Limited said in a research
note. The sharp drop came amid fresh data that showed China's growth
continues to face strong headwinds, state-run Xinhua news agency
reported. The National Bureau of Statistics said today that profits
at major Chinese industrial firms dropped 0.3 per cent year on year
in June, down from a 0.6 per cent growth posted in May. The
preliminary Caixin China Manufacturing Purchasing Managers' Index
(PMI) released on Friday retreated from 49.4 in June to 48.2 in July,
the lowest since last April. Today's sudden fall was also a result of
investors choosing to lock in profits following last week's rally of
around 20 per cent, which was a bit "steep," China Southern
Asset Management Company Limited said. Market sentiment has become
increasingly fragile following the drastic ups and downs in the
previous weeks. The market considers 4,000 points an "important
psychological mark" and risks are believed to escalate as the
Shanghai index rises above it. The recent crash which drained USD 3.2
trillion capital out of the market bankrupting millions of investors
prompting the Chinese government to unveil a slew of measures to prop
up the market, including reducing the number of new shares to avoid a
shares glut, a police crackdown on short-selling and a six-month ban
on big shareholders selling stocks. The government has launched a
criminal investigation deploying in police stock regulators office.
However, it seems the government orders may not have been carried out
by everyone, the report said.
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