Mainland China markets tumble on rumours of flood of new shares
Shanghai Composite Index plunges 6.41 per cent, while ChiNext’s falls 7.56 per cent
Mainland investors dumped shares on Thursday as rumours spread that the authorities would expand the supply of new shares, highlighting the weak sentiment in China’s capital markets despite the appointment of a new chief securities regulator last weekend.
The benchmark Shanghai Composite Index plunged 6.41 per cent, or 187.65 points, to 2,741.25 at the close, the lowest level since February 3. The Nasdaq-style ChiNext Index in Shenzhen fell 7.56 per cent, or 166.60 points, to 2,037.14.
The CSI 300 Index, tracking Shenzhen and Shanghai-listed blue chips, lost 6.14 per cent to 2,918.75, and the Shenzhen Composite Index fell by 7.34 per cent to 1,738.67.
Beijing appointed Liu Shiyu, formerly chairman of Agricultural Bank of China, as the new chairman of the embattled China Securities Regulatory Commission (CSRC) last week. But it seems investors’ confidence cannot be turned around overnight.
“Everyone is aware that fundamentals are weak now. And investors are worried about bad bank loans, bad corporate earnings, bad economic data ... anything sensitive could trigger a strong sell off,” Bocom International chief strategist Hong Hao said.
Rumours circulated early in the trading sessions that companies now listed on the over-the-counter (OTC) board would be given the chance to shift to the main boards in Shanghai and Shenzhen.
More than 5,000 companies are currently listed on China’s OTC board – the National Equities Exchange and Quotations. They are mainly traded by institutional investors and the few individual investors with more than 50 million yuan (HK$59.4 million) in assets in their individual accounts.