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China stocks sink again despite government efforts
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CHINESE shares took another tumble Tuesday, defying government efforts to arrest a precipitous fall that has wiped an estimated $3.2 trillion off markets and threatens the world's number-two economy.
The government over the weekend announced a halt to initial public offerings (IPOs) and moves to pour funds into the market to end three weeks of plunging prices.
The benchmark Shanghai Composite Index fell 1.29 percent, or 48.79 points, to end at 3,727.12 on turnover of 776.1 billion yuan ($126.9 billion). It was down as much as 5.05 percent during the day.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, slumped 5.34 percent, or 109.02 points, to 1,932.83 on thin turnover of 301.4 billion yuan.
The Shanghai market closed up 2.41 percent on Monday, in a short-lived rise after the policy package was announced at the weekend, lifted by gains in heavyweight blue-chips which were the main beneficiaries of the government response, even as most firms fell.
On Sunday, the government said the central bank would provide funds to the state-backed China Securities Finance Co. to help "protect the stability of the securities market".
The China Securities Regulatory Commission (CSRC) also said there would be a temporary halt to IPOs, which tend to drain funds from the rest of the market, hurting prices and sentiment.
A day before, China's 21 largest brokerages said they would invest at least 120 billion yuan ($19.3 billion) in so-called "blue chip" exchange traded funds (ETFs).
The latest moves followed an interest rate cut, relaxed rules on margin trading, and proposals to let the state social security funds invest in equities -- which failed to arrest a near 30 percent fall over the three weeks to Friday.
Haitong Securities analyst Zhang Qi said it was hard to tell where the bottom is for the Shanghai market.
"With investors' confidence towards the market shattered, it's really hard to tell when it will start to stabilise and recover from recent falls," he told AFP.
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