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Benjamin Robertson

Mainland markets rose then fell then rose again as investors returning from a public holiday fended off margin calls while buying on the dips.
At the end of a rollercoaster session, the Shanghai Composite Index closed up 2.16 per cent at 4,575.12 after falling by close to 5 per cent at one point; the kind of stomach-churning intraday swing investors may need to get used to following sharp falls last week.
Brokers called in margin loans on Tuesday morning after the markets dropped more than 13 per cent last week, said Louis Tse of VC Brokerage.
“When the selling finished there was a rebound,” Tse said.
A gauge of 30-day volatility on the Shanghai Composite rose to its highest since September 2009 on Friday.
Defence, financial and home appliance stocks led the rebound with investors betting shares will rise again on Wednesday as liquidity is released back into the markets following a recent wave of new listings.
The smaller Shenzhen market saw similar volatility, recovering from a morning slump to close up 1.18 per cent at 2,774.6.
Markets were also aided when China’s manufacturing PMI, a key indicator of factory output, beat expectations and edged up to 49.6 in June from 49.2 in May, according to preliminary data from HSBC and Markit Economics.
Aggressive margin trading has been a hallmark of the mainland’s near-year-long rally but the amount of borrowed money in the markets and the conditions under which it is lent is not always clear.
A report published in May last month by Credit Suisse flagged concerns over borrowing levels equal to between 6 per cent and 9 per cent of the mainland’s total stock market capitalisation.
 One recent analysis by Bloomberg found that 30 equities in Shanghai with the highest margin levels dropped 17 per cent since the market peak on June 12, compared with a 13 per cent fall in the city’s composite index.
Chengdu B-ray Media and Zhejiang Jianfeng were among companies appearing on a China Securities Regulatory Commission watch list on Tuesday of firms with close to 25 per cent of their public float trading on margin. Both firms have dropped more than 16 per cent since mid June the middle of this month.
In Hong Kong, the H-share index of locally listed mainland firms rose 1.69 per cent to 13,609.47 led by oil majors Sinopec and PetroChina.
The large cap Hang Seng Index closed up 1.02 per cent at 27,357.02, the third straight day of gains, with local investors appearing to discount the mainland market swings as simply a long overdue correction.
“The A-share market has gone up so much. The PE (price to earnings ratio) is so high, so unreasonable,” said Tse, who has likened the mainland markets to “a mad house”.
Hong Kong media stocks were hard hit on Tuesday with Hong Kong Economic Times down 6.54 per cent to HK$2 after posting year-end results. Hong Kong Television Network fell 3.67 per cent to HK$2.36 after forecasting significant increase in losses, attributed to production costs outstripping revenues, investment in e-commerce and a potential impairment loss.
Regional markets all performed strongly on the back of ongoing hopes for a stopgap deal between Greece and its creditors. The Nikkei share average hit a new 15-year high, closing up 1.87 per cent at 20,809.42.
 


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Shenzhen Stock Index

Shanghai and Shenzhen stock market indices close up after rollercoaster session

Investors look through stock information at a trading hall in a securities firm in Shanghai on June 19, 2015. Photo: Xinhua

A trader follows the movement of stock prices in Hong Kong as shares in the city and in mainland China moved higher on Tuesday. Photo: Dickson Lee

Business

Markets

.css-sioo19{color:#c79a00;}Update | Shanghai and Shenzhen stock market indices close up after rollercoaster session

Update | Shanghai and Shenzhen stock market indices close up after rollercoaster session