After only being down 10 points from the overnight close at the lunch break, Shanghai stocks crumbled in late afternoon trade fall 128 points for an overall loss of 3.39%.
Authorities in Shanghai and Beijing will be wondering what they have to do to keep this market from falling all the time. But as we learned yesterday the wall of selling from investors still wanting to liquidate only seems to be ameliorated when the government, or one of its sponsored entities, enters the market with a big buy order.
Indeed for all the ups and downs over the past few weeks in Shanghai it’s Hong Kong that perhaps gives a better indication of what traders, Chinese and foreign alike, think about the prospects for the economy at the moment.
Last week while the Shanghai composite was waltzing its way to a 5%+ gain the Hang Seng in Hong Kong fell 2.49%. This week it has continued to fall and today, with a fall of another 1.7%, the Hang Seng is has entered a bear market.
Highlighting that only government money that can keep the Shanghai Composite from falling further, Hou Yingmin, an analyst at AJ Securities, told Reuters: “Even as the government has the will to put a floor under the market, whether it has the ability to do so is in doubt. Without fresh money inflows, any rebound is not sustainable.“
Which of course is the problem with the authorities actions to wash volatility our of the market. They have also washed out speculators – the very traders who might take the other side from the sellers.
Here’s the chart of today’s action.
Follow Business Insider Australia on Facebook, Twitter, and LinkedIn