Breaking News – Chinese stock market falls by 50% with government assistance offering limited effects
The Chinese stock market continues to lose its value, with the SSE Composite Index falling to half of the peak in November last year. Some believe the fall is party attributed to the inflation control measures of the central government which has harmed profit levels, and the new regulation to lift ban on stocks by officials have yielded limited effects.
On April 22, the SES Composite Index fell 3% in morning trade, closing at 3022.6 points. Compared to the 6092.1 points recorded on October 16 2007, this is a fall by more than 50%, evaporating around $250million USD in stock value.
On Sunday, China Securities Regulatory Commission announced that it will take restrictive measures for segments of the stock market. There is widespread belief that there will be more measures to come but observers think their effects will be limited. Investors are taking a precautionary outlook to the stock market, worries that have not gone away with the introduction of the new regulation to lift bans on stocks.
During 2005, the Chinese communist officials allowed partial trading on previously un-tradeable stocks but imposed a freeze date. Now that that the prohibition period is about to end, investors are worried about large scale stock sell-offs.
the pro-profit news seems to have limited impact on the stock market. Some analysts believe for some investors that the government is intending to put breaks on the economy in order to reel in inflation and this could affect profit margins. Others believe that there might be loopholes in the intervention regulations, and these new regulations have not reduced the number of frozen stocks that could become tradeable.
The above news is brought to you by Yu Hang and Chris Thomas for the SOH Radio Network.
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