Chinese stocks meet with worst week since 2008

The aftermath of a series of initial public offerings (IPOs) and worries about stricter trading rules have caused chinese stocks to experience their worst weekly performance since the financial crisis.

The benchmark Shanghai Composite index lost 6.4% to close at 4,478.36 and dropped more than 13% over this nightmare week, its worst fall since 2008.

As such, the index fell into correction territory alongside the smaller Shenzhen benchmark which finished at 2742.18, raising fears of a bubble in China’s volatile equity markets.

On the other hand, the Hang Seng Index in Hong Kong did show progress by breaking free from the downward trend to close at 26,760.53, making a 0.3% rise.

According to analysts at IG Market, a record $1.1tn worth of funds is locked up for subscription to IPOs while the China Securities Regulatory Commission was supposedly working on margin trading risk management rules for securities companies.

Indeed, the CSRC stated last week that “brokerages should limit margin trading and short selling at no more than 4 times their net capital”.

Elsewhere, Greece’s worries did not have much impact on investors as the Nikkei 225 and Topix closed at 20,174.24 and 1,631.01 respectively, with both experiencing a 0.9% rise.

South Korea’s Kospi index climbed 0.25% to close at 2,046.96 and Australia’s S&P/ASX 200 rose 1.3% to finish at 5,596.99.

Priscilla Camryn By: Priscilla Camryn
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