BEIJING: Chinese stocks fell to the lowest level in three months as margin traders continued to unwind positions amid doubts over the effectiveness of government measures to support equities.
The Shanghai Composite Index slid 1.2 percent to 4,003.54 at the noon break. The gauge has tumbled 23 percent from its June 12 peak, helping wipe out $2.4 trillion of value, or more than France’s entire stock market. A gauge of volatility jumped to the highest level since 2008 as stocks whipsawed throughout the session.
The regulator announced late Wednesday it will no longer require brokerages to force the sale of stock held by clients with insufficient collateral, while the Shanghai Stock Exchange said the nation’s two bourses will lower transaction fees by 30 percent on Aug. 1. The moves follow a weekend interest-rate cut and calls by the regulator for investors act rationally and not believe “shorting China rumors.”
“When investors lose confidence and rush to sell, these short-term measures will be hardly sufficient to stop the rout,” said Chen Xingdong, the chief economist and head of macro-economics research at BNP Paribas SA in Beijing. “In the long term, regulators should let the market play a bigger role. Official media have been talking up the market and people have been chasing hot stocks regardless of their fundamentals.”
