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Chinese stock markets continue declines

The markets have lost nearly $3 trillion in value since June 12.

By Ed Adamczyk
The Shanghai Stock Exchange has suffered severe losses for the past three weeks. Photo by Stephen Shaver/UPI
The Shanghai Stock Exchange has suffered severe losses for the past three weeks. Photo by Stephen Shaver/UPI | License Photo

SHANGHAI, July 4 (UPI) -- Key Chinese stock exchanges continued their three-week fall this week, with brokerage firms uniting to establish a stock market fund.

The Shanghai Composite Index lost 12.1 percent in the week ending Friday and over one-quarter of its value since June 12. The Shenzhen Composite Index fell 5.3 percent and 16.2 percent in the past three weeks, and the small-cap ChiNext exchange declined 1.7 percent during the week and 10.8 percent overall.

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The markets have lost over $2.8 trillion in value since record highs on June 12.

The decline comes after a torrid year in which the Shanghai index nearly doubled. Officials have liberalized rules to slow massive selloffs of stocks, including cuts in interest rates and trading fees, and the encouragement of borrowing to make stock purchases, to no avail.

To help stabilize the market, a consortium of 21 brokers will pool 120 billion yuan ($19.3 billion) to establish a stock market fund to invest in blue-chip funds, the Securities Association of China announced Saturday. The brokers involved pledged not to reduce investments, thus propping up the value of stocks, as long as the Shanghai Index remains below 4,500; it closed at 3,686.92 on Friday. The group will actively purchase outstanding shares and encourage parent companies to increase their stake in their own companies.

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