In just the last 3 weeks, a massive $3 trillion has been wiped off the value of shares in the Chinese stock market, amounting to 30% of their total value (as a comparison, this is 7 times the total debt of Greece). 1,300 listed companies, over 40% of the market, have actually suspended share-trading. Following a 150% rise in share values from June 2014 to June 2015, this dramatic spree of “panic selling” has now resulted in government intervention. Chinese regulators have prohibited investors holding a 5%+ stake from selling their shares in the next 6 months.
Despite the government’s efforts to stop the slide, today (already being called “Black Wednesday” by some financial analysts) saw the Shanghai Composite down 6.8% and 500 firms declared they had halted trading for the time being. The Cabinet agency that is responsible for state-owned companies have now announced those companies are not permitted to sell any shares whatsoever, and are actively being encouraged to buy more shares to stabilize the clearly troubled market.
90 million Chinese investors have been affected by the turmoil of recent weeks, the majority being small investors, putting in their savings in the belief of a decent return. If you believe that the stock market, be it in the U.S. or anywhere in the world, is not the place to be entrusting your long-term future, please Like & Share this post.