Beijing to continue to stabilize stock market: CSRC

Looking back to Tuesday’s trading, the Dow Jones industrial average rose 1.1%, the S&P 500 climbed 1.2% and the Nasdaq jumped 1%.

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The slide followed an 8.5 per cent drop on Monday – its biggest one-day fall in eight years – prompting Chinese regulators to announce they were investigating the possibility of share dumping.

Monday’s dramatic slide shattered three weeks of relative calm for Chinese equities, secured through heavy government intervention, in which the authorities mopped up shares and pumped liquidity into the market while effectively barring many investors from selling.

As the Asian stocks recover before Fed meeting, global investors shrug off turmoil in Chinese market viewing the swings as common to China and other small and emerging markets. The yield on the 10-year Treasury note rose to 2.26 percent.

Market volatility represents the “most severe crisis” facing President Xi Jinping since he came to power, as investors vented their anger at the Communist Party, a few analysts say.

The Hang Seng China Enterprise Index, which tracks Chinese firms listed in the southern financial hub, retreated 1.21 percent. That’s off more than 28 percent from Shanghai’s peak in mid-June, but is still 76 percent higher than it was a year ago.

Shanghai stocks have shed 11 per cent since last Friday and are down 29 per cent from their highest point this year on June 12.

Investors were also unsettled by reports that the CSFC had started to return funds it borrowed from commercial banks to stabilise the stock market ahead of schedule, sparking fears that Beijing’s commitment to the market may be flagging.

However, the benchmark Shanghai Composite Index dropped 1.68 percent to end the day at 3,663 points, narrowing from a loss of as much as 5.05 percent in the morning session.

China Eastern Airlines’ Hong Kong shares fell 4 per cent on dilution concerns after Delta Air Lines agreed to buy a 3.55 per cent stake in China Eastern for $450 million. He added, “The mountain of leverage and the risks of margin calls are hitting market stability”. The market appears split between those who think it will happen in September or December.

Commodities extended their decline, with copper, considered a bellwether for global economic activity, trading near a six-year low at $5,322 a ton. It was recently down 0.7 percent at 3,699.93. The United Kingdom economy picked up speed in the second quarter, growing by 0.7% over the first quarter, and at an annual rate of 2.6%.

DBS Group fell nine cents to $20.99, OCBC Bank lost five cents to $10.27 and United Overseas Bank sank 22 cents to $22.97.

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In energy markets, benchmark U.S. crude was down 26 cents at $47.88 a barrel in electronic trading on the New York Mercantile Exchange.

Shanghai stock market suffers biggest drop since 2007