China’s stock market crash cannot be stopped. Amid desperate attempts by regulators to stabilize financial markets on Tuesday, July 7th, Chinese equity prices continued to plunge.
The Shanghai Composite Index dropped 1.3%. The Shenzhen Composite Index plunged a more dramatic 5.8%. ChiNext, a NASDAQ-style board on the Shenzhen Stock Exchange, tumbled 5.7%.
The past couple of weeks have been nothing but a nightmare for ChiNext. In the past 17 trading days, the ChiNext Index lost a staggering 40%. Among the 484 companies currently listed on the ChiNext board, 184 companies are in trading halts in order to prevent further loss in their share prices. Among those that were still trading, only eight stocks on ChiNext managed to finish the trading session higher.
Trillions of dollars of market value have evaporated. On Tuesday, more than 1,700 companies saw their shares tanking the 10% limit posed by regulators.
A trading suspension usually comes into place when a company undergoes a significant event, such as asset restructuring or private share placements. This time, however, analysts are saying that the reason behind most trading suspensions was to stop the tanking of share prices more than anything else. Without the trading halts, the drop in both the Shanghai and Shenzhen indices are likely to be even larger.
Trading volume declined significantly in the Chinese stock market. On Tuesday, total value of shares traded on the Shenzhen Stock Exchange was 301.4 billion yuan, only half of the 609.1 billion yuan worth of shares traded on Monday. Shanghai’s decline was more moderate, from Monday’s 943.4 billion yuan to Tuesday’s 776.0 billion yuan.