CHINESE STOCKS SUFFER BIGGEST LOSS IN TEN YEARS; 249 of the 300 ISSUES HALTED AFTER LIMIT DOWN
February 27th, 2007It would have gone further; 249 of the 300 issues on the main Shanghai and Shenzhen index went limit down—they lost 10% in a single session—before being halted.
My take, in ten words or less: China wants fewer U.S. dollar time-bombs in its house.
With regard to U.S. markets: Watch for the Plunge Protection Team to be out in force today.
Via: Bloomberg:
China’s stocks tumbled the most in 10 years on concern the government will crack down on illegal investments, bursting a bubble that helped drive benchmarks to records.
China Vanke Co., the nation’s biggest property developer, and China United Telecommunications Corp., which controls the nation’s second-largest mobile-phone operator, were among the 249 stocks that fell by the 10 percent daily limit.
The Shanghai and Shenzhen 300 Index slid 250.18, or 9.2 percent, to 2457.49. The measure, which jumped 13 percent in the past six sessions, closed at a record 2707.68 yesterday. Today’s rout wiped out $107.8 billion from a stock market that doubled in the past year, as 249 of the key index’s 300 shares plunged by the 10 percent limit.
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China’s stock market capitalization, $1.16 trillion as of yesterday, is 2 percent of the global total, according to data compiled by Bloomberg.
The State Council, China’s highest ruling body, has approved a special task force to clamp down on illegal share offerings and other banned activities in the market, the government said. The group will provide advice on regulations and policy explanations of the securities market, according to a statement published Feb. 25 on the central government’s Web site.
Tightening Measures
The government must pay attention to “bubbles” in its stock market before they get out of hand, Cheng Siwei, vice chairman of the Nation’s People Congress, wrote in a commentary published Feb. 6 in the Chinese-language Financial News. The Congress next convenes for an annual meeting on March 5.
The chinese gov also indicated recently that it intended to give internal consuption a prominent place in the country’s developpment, eventually taking over export as a the main motor for growth.
After unpegging the yuan and increasing their euro holdings, it definitely looks like we are getting there: the big players are silently exiting the stage…
or..will China dump the dollar all at once thereby causing a massive chain reaction, because after all no one wants to be left holding tons of worthless greenbacks. The whole farmlet is seeming like a better and better idea all the time