Executives at 11 Shenzhen-listed companies announced plans on Friday to increase equity holdings in their own firms, the latest efforts among corporates to stem a nearly 30 PERCENT DECLINE in Chinese stock prices over the past three weeks.
The announcements followed a proposal earlier in the day by 28 firms on Shenzhen's ChiNext board for quick-growing enterprises, urging all publicly traded firms to act "to maintain capital market stability and prosperity".
Stock prices on China's main exchanges in Shenzhen and Shanghai have been volatile since the government last month announced a crackdown on leveraged share trading. The extent of the price decline has raised the prospect of a stock market crash, threatening financial stability and economic recovery.
To help avert a crash, executives have started buying shares in their companies in an apparent show of confidence. On Thursday, 12 listed firms said major shareholders or top managers recently increased holdings.
We have collated views from various experts on the sharp selling in China markets and its impact:
Nicholas Teo, Market Analyst, CMC Markets: "from best to worst'
We are seeing another sort of turmoil being played out and it has been largely recognised that the Chinese market has been fuelled by two things. One, easy and cheap money from margin lending and, two, they are getting a new brand of investors or traders coming into the ball game.
They are mainly novice investors or traders, like pensioners, school teachers, retirees etc. These investors are very dangerous. They have ultimately led to this very acute selldown that we have seen in the last two-three weeks. Literally overnight, the Chinese markets have gone from the best to the worst.
Geoffrey Dennis, UBS Investment Bank: "Volatility in China shows volatility of investors"
In the long term, the situation in China is much more significant for the emerging markets. In the short term, there is a lot of worry around Greece but in the longer term, the impact of the Chinese slowdown and a very weak market will be of a greater concern for the emerging markets overall.
So, the volatility in China is indicative of the volatility of investor sentiment inside China itself. The main index which foreign investors look out, which is the Hong Kong-listed China enterprises index, has obviously come down, but it has not come down as much as the other indices.
The announcements followed a proposal earlier in the day by 28 firms on Shenzhen's ChiNext board for quick-growing enterprises, urging all publicly traded firms to act "to maintain capital market stability and prosperity".
Stock prices on China's main exchanges in Shenzhen and Shanghai have been volatile since the government last month announced a crackdown on leveraged share trading. The extent of the price decline has raised the prospect of a stock market crash, threatening financial stability and economic recovery.
To help avert a crash, executives have started buying shares in their companies in an apparent show of confidence. On Thursday, 12 listed firms said major shareholders or top managers recently increased holdings.
We have collated views from various experts on the sharp selling in China markets and its impact:
Nicholas Teo, Market Analyst, CMC Markets: "from best to worst'
We are seeing another sort of turmoil being played out and it has been largely recognised that the Chinese market has been fuelled by two things. One, easy and cheap money from margin lending and, two, they are getting a new brand of investors or traders coming into the ball game.
They are mainly novice investors or traders, like pensioners, school teachers, retirees etc. These investors are very dangerous. They have ultimately led to this very acute selldown that we have seen in the last two-three weeks. Literally overnight, the Chinese markets have gone from the best to the worst.
Geoffrey Dennis, UBS Investment Bank: "Volatility in China shows volatility of investors"
In the long term, the situation in China is much more significant for the emerging markets. In the short term, there is a lot of worry around Greece but in the longer term, the impact of the Chinese slowdown and a very weak market will be of a greater concern for the emerging markets overall.
So, the volatility in China is indicative of the volatility of investor sentiment inside China itself. The main index which foreign investors look out, which is the Hong Kong-listed China enterprises index, has obviously come down, but it has not come down as much as the other indices.
