6th January 2016
China has taken further radical steps to prevent a stockmarket collapse, buying into local stocks.
The emergency measures follow a 7% slump in the Chinese stockmarket in the first 2016 trading session. The rout was so bad the Chinese authorities closed the stockmarket 90 minutes earlier than scheduled.
The Shanghai Composite Index hit a three-month low of 6.9% and the Shenzen Composite fell by more than 8%.
It was the first time the ‘circuit breaker’ system was used, which immediate stops trading and is used to bring market volatility in line.
Now the Chinese government has used state-owned companies in Beijing to purchase shares in the hope of propping up the ailing market. However, the regulation has extended a selling ban on major companies to try and put a halt to the sell-off.
The People’s Bank of China also injected another 130 billion yuan – the equivalent of $20 billion – into the financial system. This is the largest sum put into markets since September.