Chinese Stocks Crash

The Shanghai Composite just had its biggest one-day fall in eight years. The index lost 8.48%.

Analysts say investors fearful the government would curb its purchases of blue-chip stocks sparked Monday’s selling. Others said officials could be testing whether the market can support itself.

Authorities may want to “test whether the market has recovered its resilience,” said Fu Xuejun, a strategist at Huarong Securities. “The government wants to use state funds to stabilize the market, not to prop it back to 5000 points overnight.”

Earlier this month, 21 brokerages pledged to support the Shanghai index as long as it stayed below the 4500 level. Before Monday, China’s main stock market had rallied for three-straight weeks.

Posted by Eddy Elfenbein on July 27th, 2015 at 8:08 am

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