China’s stock markets face a make-or-break week after officials rolled out an unprecedented series of steps at the weekend to prevent a full-blown crash that would threaten the world’s second-largest economy.
The government is awaiting the market today to see if the new measures will halt a 30 per cent plunge in the past three weeks, or if panicky investors who borrowed heavily to speculate on stocks will continue to sell.
In an extraordinary weekend, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China’s state-backed margin finance company which would be aided by a direct line of liquidity from the central bank.
China also orchestrated a halt to new share issues, with dozens of firms scrapping their IPO plans in separate but similarly worded statements over the weekend, in a tactic authorities have used before to support markets.
A survey by eastmoney.com, which polled more than 100,000 individuals, said investors believed stock indexes would rise more than 5 per cent today. However, many didn’t think the bounce will last long.
“You’re going to need the central bank to open the floodgates to take us back to 4,500 points in Shanghai,” said an investment manager in Shanghai. The Shanghai Composite Index was last at 4,500 on June 25, and is now trading 22 per cent lower.– (Reuters)
