Soren Moller Finance says that signs have emerged that measures introduced by China’s financial regulators to arrest the sharp falls in the country’s mainland stock indices may have begun to work. Since stepping in to the markets last week, prices have continued their steep declines but Thursday’s session brought much-needed respite when the Shanghai Composite ended the day 5.76% up.
Stocks listed on the Shanghai and Shenzhen Composites have fallen more than 30% from their mid-June highs after financial regulators moved to tighten margin trading rules which they believed were fueling an excessive and unsustainable boom in equity values.
Since their initial interventions, regulators have moved to ban large investors from selling stocks in companies in which they hold more than 5% of total issued stock for six months. They have also injected liquidity into the state-backed margin financing company and raised the limit on how much insurers can invest in blue-chip stocks from 5% to 10% of their total assets.
“The measures appear to have put an end to the selling but Thursday’s positive close could be little more than a dead-cat bounce,” said Joshua Milan, senior Asian markets analyst at Soren Moller Finance. “There is evidence to suggest that the markets are now in an oversold condition but an awful lot of ordinary, retail investors will have been badly impacted by this rout.”
Soren Moller Finance says it has reservations about the government’s interventions citing the fact that, despite the sharp declines, the Chinese equity market is still meaningfully higher than it was a year ago.
About Soren Moller Finance:
Soren Moller is an advisory firm based in Luxembourg with offices in London and Hong Kong. Soren Moller was established in 2002. We aim to provide advice to both individuals and companies on all aspects of financial planning, through a long term approach of fully understanding our clients' needs, wants and aspirations and then prioritizing objectives.
Being independent financial advisors means that our clients benefit from our ability to offer advice on the broadest range of products and services. Whether you are looking for investment advice, retirement planning, inheritance tax planning or simply reducing costs, we have many years of experience in finding the most suitable solution for your needs.
Contact Soren Moller Finance:
Head Office: 39, Allee Scheffer, L-2520,
Email: [email protected]
Contact: +352 2786-0867
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