Panic Selling Sinks Chinese Stock Market
The Shanghai Composite Index plunged 8.5% today in China's steepest percentage stock decline since February 2007. The index closed at 3,725.56, which while up 6% from the July 8 nadir is still a 28% decline from June stock market highs. To put this into perspective, an equivalent dive in the Dow Jones Industrial Average would result in that gauge shedding 1,500 points in a single day. Analysts chalked up the selloff to investors having lost faith in the government's heavy-handed attempts to curtail losses. Some went further, suggesting that the private sector is on a selling spree to see how the market might perform without interference from Beijing. In the six weeks since China's stock market woes began the government has postponed IPOs, capped short selling and prohibited the biggest shareholders from selling stock while pumping an estimated $800B into the market to keep it afloat.