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| China stocks tumble again after premier Li Keqiang fails to mention crisis | China stocks tumble again after premier Li Keqiang fails to mention crisis |
| (about 1 hour later) | |
| Hundreds of Chinese companies suspended dealings in their shares in a bid to arrest a frenzy of selling on China’s main stock markets, which have lost more than a quarter of their value since June. | Hundreds of Chinese companies suspended dealings in their shares in a bid to arrest a frenzy of selling on China’s main stock markets, which have lost more than a quarter of their value since June. |
| The move, considered by many analysts to be another stumbling response to a full-blown share price crash, sparked a nervous reaction in commodity markets and sent copper prices to a six-year low. | The move, considered by many analysts to be another stumbling response to a full-blown share price crash, sparked a nervous reaction in commodity markets and sent copper prices to a six-year low. |
| Beijing has supported a series of market operations to halt a sharp decline in share values on the Shanghai and Shenzen exchanges over the past four weeks, but each one has been criticised for failing to restore market confidence. | Beijing has supported a series of market operations to halt a sharp decline in share values on the Shanghai and Shenzen exchanges over the past four weeks, but each one has been criticised for failing to restore market confidence. |
| Chinese shares fell on Tuesday after premier Li Keqiang’s failure to mention the deepening market crisis in a statement on the economy. Before the market opened, Li said in comments on a government website that China had the confidence and ability to deal with challenges faced by its economy. But he had nothing to say about the three-week plunge that has knocked about 30% off Chinese shares since mid-June. | Chinese shares fell on Tuesday after premier Li Keqiang’s failure to mention the deepening market crisis in a statement on the economy. Before the market opened, Li said in comments on a government website that China had the confidence and ability to deal with challenges faced by its economy. But he had nothing to say about the three-week plunge that has knocked about 30% off Chinese shares since mid-June. |
| Related: Beijing's desperate attempts to control the stock market will end badly | Related: Beijing's desperate attempts to control the stock market will end badly |
| After a brief pause to the slide on Monday, the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.8% on Tuesday, while the Shanghai Composite Index shed 1.3%. The ChiNext growth board, home to some of China’s headiest small-cap valuations, fell 5.1%. | After a brief pause to the slide on Monday, the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.8% on Tuesday, while the Shanghai Composite Index shed 1.3%. The ChiNext growth board, home to some of China’s headiest small-cap valuations, fell 5.1%. |
| Commodities followed the downward march of shares, with the benchmark copper price on the London Metal Exchange falling nearly 6% to $5,261.50 a tonne – its lowest since July 2009. The metal, used in power and construction, recovered a little of its earlier losses later in the day, but reflected falls in nickel and other industrial metals. | Commodities followed the downward march of shares, with the benchmark copper price on the London Metal Exchange falling nearly 6% to $5,261.50 a tonne – its lowest since July 2009. The metal, used in power and construction, recovered a little of its earlier losses later in the day, but reflected falls in nickel and other industrial metals. |
| In an attempt over the weekend to halt the slide in domestic markets, China has arranged a curb on new share issues and enlisted brokerages and fund managers to buy massive amounts of shares, helped by China’s state-backed margin finance company, which in turn has a direct line of liquidity from the central bank. | In an attempt over the weekend to halt the slide in domestic markets, China has arranged a curb on new share issues and enlisted brokerages and fund managers to buy massive amounts of shares, helped by China’s state-backed margin finance company, which in turn has a direct line of liquidity from the central bank. |
| The suspension of trading in some of the worst-hit firms was another tactic adopted by regulators that has so far failed to restore confidence. On Tuesday another 173 firms announced trading suspensions after the market, bringing the total to almost 950, or more than a third of all listed firms on the two main exchanges. | The suspension of trading in some of the worst-hit firms was another tactic adopted by regulators that has so far failed to restore confidence. On Tuesday another 173 firms announced trading suspensions after the market, bringing the total to almost 950, or more than a third of all listed firms on the two main exchanges. |
| Analysts said the government was taking a big risk. “China’s leadership has doubled down on its efforts to prop up equity prices, because it believes that its own credibility is now coupled to continued gains on the markets,” said Mark Williams of consultancy Capital Economics. | Analysts said the government was taking a big risk. “China’s leadership has doubled down on its efforts to prop up equity prices, because it believes that its own credibility is now coupled to continued gains on the markets,” said Mark Williams of consultancy Capital Economics. |
| “Our view remains that a market rally cannot run ahead of economic fundamentals indefinitely,” he said. “There is a good chance that the market rescue efforts are seen to be a failure in a few months’ time.” | “Our view remains that a market rally cannot run ahead of economic fundamentals indefinitely,” he said. “There is a good chance that the market rescue efforts are seen to be a failure in a few months’ time.” |
| Global investors have grown increasingly worried that a crash could destabilise the world’s second-biggest economy and the source of much of the world’s economic growth. | Global investors have grown increasingly worried that a crash could destabilise the world’s second-biggest economy and the source of much of the world’s economic growth. |
| “I don’t see any change in the downward trend,” said Qi Yifeng, analyst at consultancy CEBM. “It’s only a matter of whether the market will fall more slowly, or continue to go south in a freefall.” | “I don’t see any change in the downward trend,” said Qi Yifeng, analyst at consultancy CEBM. “It’s only a matter of whether the market will fall more slowly, or continue to go south in a freefall.” |
| The official Shanghai Securities News reported on Tuesday that China’s major insurance firms ploughed tens of billions of yuan into blue-chip exchange-traded funds (ETF), and large listed companies on Monday. | The official Shanghai Securities News reported on Tuesday that China’s major insurance firms ploughed tens of billions of yuan into blue-chip exchange-traded funds (ETF), and large listed companies on Monday. |
| China Life Insurance bought a net 10bn yuan (£1bn) in index funds, while China Pacific Insurance Group and other insurers each invested more than 1bn yuan, the newspaper said. | |
| The purchases helped the indexes rise just over 2% on Monday, but the relief was shortlived. | The purchases helped the indexes rise just over 2% on Monday, but the relief was shortlived. |
| Lei Mao, assistant professor of finance at Warwick Business School, said government measures to support the market distorted the allocation of funds, and trading behaviour, and could create the conditions for further sharp falls. | Lei Mao, assistant professor of finance at Warwick Business School, said government measures to support the market distorted the allocation of funds, and trading behaviour, and could create the conditions for further sharp falls. |
| “Even an optimistic investor should not participate in the market for now,” he said. | “Even an optimistic investor should not participate in the market for now,” he said. |
| Traders are increasingly unnerved by the unusually large number of Chinese companies asking for their shares to be suspended from trading, fearing that many of them are looking for excuses to sit out the market turmoil. | Traders are increasingly unnerved by the unusually large number of Chinese companies asking for their shares to be suspended from trading, fearing that many of them are looking for excuses to sit out the market turmoil. |
| About a quarter of the 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Monday. On Tuesday, the Securities Times said another 200 had announced a suspension. | About a quarter of the 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Monday. On Tuesday, the Securities Times said another 200 had announced a suspension. |
| Investors were also reacting to news of tightened restrictions on futures trading on a major index of smaller companies. | Investors were also reacting to news of tightened restrictions on futures trading on a major index of smaller companies. |
| The rapid decline of China’s previously booming stock market, which had more than doubled in the year to mid-June, has become a major headache for President Xi Jinping and China’s senior leaders, who are already struggling to avert a sharper economic slowdown. | The rapid decline of China’s previously booming stock market, which had more than doubled in the year to mid-June, has become a major headache for President Xi Jinping and China’s senior leaders, who are already struggling to avert a sharper economic slowdown. |
| Even China’s bullish securities regulators admitted that markets had become frothy before they turned down, but the slide quickly showed signs of getting out of hand. | Even China’s bullish securities regulators admitted that markets had become frothy before they turned down, but the slide quickly showed signs of getting out of hand. |
| A surprise interest rate cut by the central bank at the end of June, relaxations in margin trading and other “stability measures” did little to calm investors, many of whom are individual investors who have borrowed heavily to play the stock market. | A surprise interest rate cut by the central bank at the end of June, relaxations in margin trading and other “stability measures” did little to calm investors, many of whom are individual investors who have borrowed heavily to play the stock market. |
| In a series of announcements on Saturday, China’s top brokerages pledged to collectively buy at least 120bn yuan of shares to help steady the market, and said they would not sell while the Shanghai Composite Index remained below 4,500. The index has traded below that level since 25 June. |