News The African Way

Shanghai Stock Exchange Nose Dives, Dragging Down Other Asian Giants

Beijing (AsiaNews / Agencies) – The Shanghai Stock Exchange has plummeted this morning, jeopardizing the financial soundness of the main Asian stock markets. Morning trade saw the Shanghai Composite Index losing 8.4% to 3,200 points.

The measures promised over the weekend by the Beijing government to strengthen the confidence of investors – to invest most of the pension funds in the stock market – have not had any effect. The Hang Seng China Enterprises Index lost 5.8%.

The Shanghai disaster echoed on the Hang Seng Index in Hong Kong, which lost 4.7% and whose index fell to 15, the lowest number since the market crisis of October 1987. The Taiwan Taiex lost 7.5%, while the Japanese Nikkei has suffered a bit less, losing 2.8% (the lowest in five months however).

On the Shanghai Composite, 750 stocks fell below the limit of 10%, including China Shenhua Energy. The financial index fell to 37% from the peak reached on June 12, burning 4 trillion. Chen Gang, an analyst at Heqitongyi Asset Management, based in Shanghai, said that “this is a disaster, and nothing seems capable of stopping it. If we do not cut securities, we risk a forced closure. I hope we can survive”.

Despite these latest worrying developments, Carlo Cottarelli, executive director of the International Monetary Fund says “it is entirely premature to talk of a crisis in China”. Investment forecasts speak of an annual growth rate for Beijing of 6.8%, a fall compared to 7.4% last year.

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