Chinese stocks dived again on July 8, ignoring a battery of support measures from Beijing. As companies scrambled to have trading in their shares suspended, the People’s Bank of China said it was watching closely and would guard against systemic regional financial risks.
Around 30% has been knocked off the value of Chinese shares since mid-June. The Shenzhen Composite Index has led declines with a 38 per cent plunge since its June 12 peak. China’s CSI300 index has lost a third of its value since June in the steepest downward correction since the global crisis in 2008. The fear that China’s market turmoil will destabilise the real economy is now looming as a bigger risk than the euro zone crisis.
Over 500 China-listed firms have announced trading halts on the Shanghai and Shenzhen Exchange on July 8, taking total suspensions to about 1,300 – which forms 45% of the market – as companies seek shelter from the rout.
The rout in Chinese shares has erased at least $3.2 trillion in value, or twice the size of India’s entire stock market.