Shanghai, the financial bubble bursts: Stock Exchange suspends trading on 51% of shares
Beijing (AsiaNews) - What is on the horizon "could be the Chinese1929", referring to the Wall Street crash that gave birth to the Great Depression in the United States. This is according to the analysis of several international financial experts in today’s papers following the implosion of the financial bubble in Shanghai.
A group of 1,429 companies - or 51% of the total listed - asked to be suspended (or were suspended) for excessive markdowns. The central government is preparing a contingency plan, which does not seem to convince investors.
On the other hand the already excessive growth of the Shanghai market had triggered some doubts. In 12 months the China stock markets- Shanghai and Shenzhen, to which Hong Kong was later added - had made gains of 150%, a rise largely attributable to the flow of public money that Beijing has injected into the markets.
According to an analysis of the Daily Telegraph, China is the real problem not "the Greek pantomime: while Westerners are focusing on Greece, a potentially much more significant financial crisis is developing across the world. Which some are starting to call the Chinese 1929 ".
Although the reference to the financial crash that brought America to its knees is perhaps exaggerated, today the Shanghai Stock Exchange index dropped by 5.4% (after a fall of 8% on opening); Hong Kong by 4.9%. Chinese fears, in addition to the anxieties related to the Greek crisis, have also led Tokyo to close down 3.14%.
The Chinese central government intervened to try to at least partially curb damage to the stock exchange. Today the People’s Bank of China promised "new commitments for stability" and made it clear that it will provide "ample liquidity" to the market. According to regulators, a group of leading brokers have pledged to buy shares to "restore calm in the market, hit by an unjustified panic." The government also ordered the public subsidiaries to buy shares and loosened limits on the amount of investments by insurance companies and promised to continue to provide liquidity to credit investors.