8 Jul 2015
Shanghai Compsoite crashes, chaos worsens
FXStreet (Mumbai) - Chinese stock markets fell on Wednesday as new measures failed to arrest the three-week sell-off, which has now spilled over the global markets.
The Shanghai Composite fell almost 6% to 3500 levels, while Hang Seng Index fell more than 5% and a gauge of Chinese companies listed offshore in the city, known as H-shares, fell 6.4%.
PBOC to provide liquidity support
The latest effort to halt the sell-off came from the PBOC, which pledged “various channels” to provide liquidity to the stock market, including to China Securities Finance Corporation, which funds margin lending by brokers. It will increase also purchases in small-cap stocks, the securities regulator said.
The sentiment worsened after more than 1400 Chinese companies decided to suspend trading on Wednesday, which accounts for over 50% of total 2754 listed firms.
Spillover effect
The crash in the Chinese equities triggered risk aversion across the global markets. The traditional safe haven assets – Treasuries, Japanese Yen are on the rise except Gold. Commodity currencies are being ditched aggressively, with the AUD leading the way on account of triple whammy of Chinese concerns, falling iron price, and risk-off due to fears of Grexit.
The Shanghai Composite fell almost 6% to 3500 levels, while Hang Seng Index fell more than 5% and a gauge of Chinese companies listed offshore in the city, known as H-shares, fell 6.4%.
PBOC to provide liquidity support
The latest effort to halt the sell-off came from the PBOC, which pledged “various channels” to provide liquidity to the stock market, including to China Securities Finance Corporation, which funds margin lending by brokers. It will increase also purchases in small-cap stocks, the securities regulator said.
The sentiment worsened after more than 1400 Chinese companies decided to suspend trading on Wednesday, which accounts for over 50% of total 2754 listed firms.
Spillover effect
The crash in the Chinese equities triggered risk aversion across the global markets. The traditional safe haven assets – Treasuries, Japanese Yen are on the rise except Gold. Commodity currencies are being ditched aggressively, with the AUD leading the way on account of triple whammy of Chinese concerns, falling iron price, and risk-off due to fears of Grexit.