Chinese investors monitor displays of stock information at a brokerage house in Beijing
China’s volatile stock market is taking shareholders on a white-knuckle ride, threatening to drive out the small investors Beijing hopes will help pay for reforms of state industry.
After falling 6.1 percent on Tuesday, the market benchmark declined another 5 percent yesterday before rebounding in the final minutes of trading to close up 1.2 percent.
China’s main Shanghai stock index was the main focus following a big slide during the previous session when investors sold Chinese stocks on fears that the country’s currency, the yuan, would fall further. The yuan has been stable for a few days after a series of surprise devaluations by Beijing last week. Though a cheaper yuan is expected to boost exports, it has underscored concerns over the state of the Chinese economy.
Beijing’s multibillion-dollar intervention over the past month helped to mitigate the situation. But authorities say they will avoid taking action every day, which could allow wide daily swings in a market filled with rumors and anxiety.
Zhang Yang, a market strategist for Sinolink Securities, said, “Maybe sharp volatility is becoming the new normal.”
“The Chinese equity market may have ended on a positive note, but the erratic swings should be viewed with caution, and such a wide trading range tells us that China will not be stable for some time,” said David Madden, market analyst at IG. AP
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