China announced a flurry of new moves Wednesday July 08,2015 to halt a stock market slide. The result? Another big dive in share prices.
The government told state companies and executives to buy shares, raised the amount of equities insurance companies can hold and promised more credit to finance trading.
On Wednesday July 08,2015, the Cabinet agency that oversees China's biggest state-owned companies said it had told them to avoid selling shares and to buy more "in order to safeguard market stability."
In a separate order, the securities regulator told directors, executives and senior managers of publicly traded companies who have sold shares in those companies within the past six months to buy them back and said they are barred from selling. It said they are required to buy more if the price falls by more than 30 percent in the next 10 days.
The insurance regulator said the proportion of their assets Chinese insurers are allowed to invest in stocks will be increased to 40 percent from 30 percent. The amount of a single blue-chip company's shares that an insurance company can buy will increase to 10 percent from 5 percent.
Hundreds of companies have halted trading in their stock after emergency measures announced last weekend failed to stop a rout that has dragged down the benchmark Shanghai Composite Index by more than 30 percent since early June 2015
The Shanghai index lost another 5.9 % on Wednesday July 08,2015 despite the new measures and Hong Kong's Hang Seng index closed down 5.8 %after diving as much as 8.5 %earlier in the day.
The Shanghai index still is up 70% from one year ago but novice investors who piled in just before the peak hold shares that are worth less than they paid.
Note
Greece's debt crisis has unsettled Asian stock markets but the losses in China are driven entirely by internal factors.
China fostered a market boom over the past year, but with Chinese economic growth slowing, it had little basis in reality. Prices began collapsing after unrelated changes in banking regulations made investors in the rumor-fueled market suspect the government could withdraw its support
Financial literacy is limited in a society where the mainland's first communist-era stock exchange opened in Shanghai only in 1990. Brokerages offer classes in trading but a culture of commentators who preach the gospel of low-risk, long-term investing has yet to develop. Many small investors rely on rumors or tips from friends in a market rife with complaints of insider trading and fraud.
The government told state companies and executives to buy shares, raised the amount of equities insurance companies can hold and promised more credit to finance trading.
On Wednesday July 08,2015, the Cabinet agency that oversees China's biggest state-owned companies said it had told them to avoid selling shares and to buy more "in order to safeguard market stability."
In a separate order, the securities regulator told directors, executives and senior managers of publicly traded companies who have sold shares in those companies within the past six months to buy them back and said they are barred from selling. It said they are required to buy more if the price falls by more than 30 percent in the next 10 days.
The insurance regulator said the proportion of their assets Chinese insurers are allowed to invest in stocks will be increased to 40 percent from 30 percent. The amount of a single blue-chip company's shares that an insurance company can buy will increase to 10 percent from 5 percent.
Hundreds of companies have halted trading in their stock after emergency measures announced last weekend failed to stop a rout that has dragged down the benchmark Shanghai Composite Index by more than 30 percent since early June 2015
The Shanghai index lost another 5.9 % on Wednesday July 08,2015 despite the new measures and Hong Kong's Hang Seng index closed down 5.8 %after diving as much as 8.5 %earlier in the day.
The Shanghai index still is up 70% from one year ago but novice investors who piled in just before the peak hold shares that are worth less than they paid.
Note
Greece's debt crisis has unsettled Asian stock markets but the losses in China are driven entirely by internal factors.
China fostered a market boom over the past year, but with Chinese economic growth slowing, it had little basis in reality. Prices began collapsing after unrelated changes in banking regulations made investors in the rumor-fueled market suspect the government could withdraw its support
Financial literacy is limited in a society where the mainland's first communist-era stock exchange opened in Shanghai only in 1990. Brokerages offer classes in trading but a culture of commentators who preach the gospel of low-risk, long-term investing has yet to develop. Many small investors rely on rumors or tips from friends in a market rife with complaints of insider trading and fraud.
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