Shanghai Composite Fell 21% in August

THE SECOND LARGEST MONTHLY DROP IN 15 YEARS

 

Translated from Lianhe Zaobao (Chinese), published 1 Sep 2009

Recent heavyweight stocks in the Chinese markets collectively fell, resulting in panicky sentiments among investors. According to a report by the China Economic Weekly, an unnamed source close to the Chinese regulators said policies to stabilize the markets may be launched. This source also emphasized that market stabilizing measures does not specifically target the Chinese national day on 1 Oct. Such measures may include the reduction of short-term notes issued by the Chinese central bank, and the speeding up of IPO and fund launches. However, with the continued volatility in the A-share market, stabilizing the Chinese markets will be a challenge for the stock market regulators.

On 5 Aug, the Shanghai Composite Index peaked at a high of 3478.01 and started dropping thereafter. By 17 Aug, the index fell to 2870.63 or 5.79%, the largest single-day drop this year. Yesterday, the index went a step further, dropping by 6.74% to a new low of 2667.75. Before this, the largest single-day drop in the Shanghai Composite was back in 10 Jun last year at 7.73%. Over at the Shenzhen market yesterday, there was a corresponding big drop of 7.55% to 10585.08.

Note: Based on first 6 paragraphs of article.