Dancing with the Chinese market

CHINESE authorities and financial institutions have undertaken coordinated actions to stem the bleeding in the equity markets, but it appears that sentiments were hardly swayed.

Chinese stocks continued to fall despite a number of significant government measures, including PBOC easing, a reduction in trading fees and a loosening of margin trading restrictions. It seems that the Chinese stock market's rebound, specifically the Shanghai shares, on Monday was nothing more than a short break. The shift in market tone from bullish to bearish has seen the Shanghai Composite fall by nearly 30 per cent, over the last three weeks.

Over the recent weekend, Beijing announced a suspension on all new IPOs and worked with local brokerages to establish market stabilisation funds to reverse the rout in equities. Bloomberg reported that 57 Chinese mutual funds pledged to invest another 2.2 billion yuan (S$480 million) in their funds. The latest initiatives appeared to have worked at the beginning of the week, with the main Shanghai Index surging 7.8 per cent right after the open. However, it turned out to be a dead cat bounce as market mood remained sombre, and the opening gains were quickly eroded. By the end of Monday, the Index closed a…