China's share market continued to slide on Tuesday, as investors registered their mistrust of government efforts to deal with the bear run, with the Shanghai Composite Index sinking for the fourth day in five, ending the day down 1.3 per cent at 3,727.13 points.
For every stock that rose, 16 fell, part of a broader decline which has seen the index fall more than 30 per cent in three weeks.
The index has lost about €2.9 trillion ($3.2 trillion) in value in the current slide, which is nearly 12 times Greece’s entire foreign debt, which is estimated at €242.8 billion, and more than 12 times its gross domestic product (GDP) which is reckoned at about €238 billion last year.
About 700 companies on the 1,106-member Shanghai Composite dropped by the 10 per cent daily limit, with the brunt of the losses in the technology, telecom, drug and consumer stocks in the CSI 300 index.
Foreign investors are dumping Shanghai shares at a record pace.
In response, President Xi Jinping’s government has gone on the offensive. State-owned finance firms have been ordered to buy 120 billion yuan (€17.54 billion) worth of shares and has put the brakes on initial public offerings.
The China Financial Futures Exchange announced on Monday it would limit the daily trading volumes of index futures linked to the CSI 500 Index, while 57 mutual funds pledged to invest more in their funds.
The China Association for Public Companies urged listed companies, major shareholders and management to buy back shares.
Markets were unsettled by China’s premier Li Keqiang’s failure to address the stock market slide in remarks carried on a government website this week.
He said China had the confidence and ability to deal with the risks and challenges faced by its economy, and that major economic indicators have stabilised and positive signs are emerging in the world’s second-largest economy.
Mr Li didn’t mention China’s stock market, sparking fears that he was avoiding what is emerging as a major problem.
China’s stock market has lured a record number of small investors in recent months, turning the market into the second biggest in the world after the United States.
The bear run is spilling over to Hong Kong, where the Hang Seng China Enterprises Index, or H-shares gauge, fell 3.3 per cent, extending losses to 20 per cent from the May 26.
The overall Hang Seng Index, which entered a correction on Monday of this week with a loss of more than 10 per cent from April highs, retreated by one per cent.
