China Stocks Resume Selloff - Matsuda Global.


Posted August 11, 2015 by GlobalNews247

Matsuda Global - Poor economic data and concerns that Chinese authorities might pull support for stocks sends prices tumbling.
 
Matsuda Global: Rumors that the Chinese authorities are considering winding down their support for equities are widely thought to be the catalyst for an 8.5% selloff in the Shanghai Composite early this week, the index’s largest one-day fall in over 8 years.

The battered equity market, which had only recently begun to pare losses that peaked at 30% off from their mid-June highs, succumbed to renewed selling pressure as weak economic data showed that Chinese factory activity was at its lowest for 15 months and that profits at the country’s industrial firms fell 0.3% in June year on year.

“It’s the clearest signal yet to the authorities that China’s stocks still need support,” said an Matsuda Global analyst.

The country’s regulators stepped into markets in mid-July with measures designed to stem unprecedented outflows from equities. The rebound that followed their interventions had spurred rumors that sellers had exhausted their efforts but economic data served as a timely reminder that China’s economy still faces strong headwinds.

“What’s equally alarming is that a selloff of this magnitude happened even when trading is still suspended in 15% of listed stocks. If they were all tradable, the extent of the selling might have been larger,” explained the “Matsuda Global” analyst.

Matsuda Global, however, reiterated its view on the outlook for Chinese equities. It believes that the authorities will move to reaffirm their commitment to supporting equities and implement further stimulus in the real economy in the face of slowing global demand and the threat of an increase in US interest rates.
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Issued By simon mckoy
Country United States
Categories Banking , Business
Tags china , china selloff , matsuda , matsuda global
Last Updated August 11, 2015