From last November until June 12 the Chinese stockmarket headed towards seventh heaven, more than doubling in size. Yes, doubling. In fact it grew by 110%, but since mid-June the music has stopped and the market has been gripped by feverish volatility, losing more than 40%, with 10% wiped off the books in the past week alone.
Money is surging in and out of China, but mostly out, making the walls of prices in Shanghai go red, and the faces of government regulators, who are investigating unidentified “speculators”.
With barely a pause the index has crashed from over 5,120 to Friday’s 3,686 in around three weeks,
“I think the government measures have been positive, because this is just a lack of confidence. Everybody feels the pressure to stabilise the market. This morning things were more stable, but the afternoon saw another drop, it’s a vicious circle,” says Market Analyst at Haitong Securities Zhang Qi.
A slew of policy moves including a cut in interest rates and relaxed margin trading rules has failed to stop the slide, which has had some traders frantically running to stand still, trying to reverse big paper losses.