Chinese regime fails to restore investor confidence and stocks sink to 5-year lows

The chinese stocks suffered strong oscillations on Monday, sinking to 5 year minimumafter stock market regulators tried to reassure restless investors with promises to crack down on the stock price manipulation and the “malicious short selling”.

The actions in Shanghai and in the smallest market of Shenzhennear Hong Kong, ranged between large losses and small gains throughout the day. Markets have languished due to the strong sale of real estate shares who have suffered with real estate market crash.

Market analysts said there were signs that the authorities had orderedas usual, large institutional investors to intensify purchases of state banks and other heavyweights.

He Industrial and Commercial Bank of China rose 2.3%, the Bank of China 2.6% and Agricultural Bank of China 2.2%.

But the stocks continued to lose mostly terrain.

He Shenzhen Component index lost 1.1% after falling up to 4.4%. He Shanghai Composite Index fell 1%up to 2,702.19 points, after having lost 3.5% previously.

He CSI 1000 indexan exchange-traded fund that fell by 8.7% on Monday before recovering some of the losses to close with a 6.1% decrease, recorded more abrupt oscillations. The CSI 1000 is often used to track calls “snowball derivatives”which offer large profits but can also lead to exaggerated losses.

The stock market fall is a sign of investors’ low confidence in the measures taken by the Chinese authorities to restore confidence in the markets.

On Sunday, the China Securities Regulatory Commission I declare that would redouble the application of measures against crimes such as market manipulation and the malicious short sellingwhile it would guide the entry of more medium and long-term funds into the market.

This measure was added to others adopted in recent days, which seem to have done little to reassure investors, who have been months withdrawing money of the markets. Last week, Chinese stocks closed their worst week in five years.

The former US president’s comments donald trump saying that he could impose a tariff of more than 60% on imports of Chinese products if he is re-elected they also hurt market sentiment.

In another blow, a report said that the China’s services sector grew at a slightly slower pace in January, with the purchasing managers’ index falling to 52.7 from 52.9 in December, according to a private sector survey on Monday. A PMI above 50 indicates expansion compared to the previous month.

Chinese companies have lost billions of dollars in market value as investors move away from Hong Kong and mainland Chinese markets in search of better returns.

Apart from the real estate market problems, in which developers struggle to clean up their balance sheets after the government cracked down on excessive borrowing several years ago, the slowdown of the Chinese economythe second in the world, has also taken its toll.

The prices have continued to fall despite the various confidence-building measures put in place so far, such as the release of more than 1 trillion yuan ($140 billion) for loans to developers.

Sunday’s announcement China Securities Regulatory Commission seemed intended to reassure retail investors, who account for more than half of trading volume.

Among other things, he said that the Proportion of stocks subject to short selling risks had fallen from 10.5% in 2018 to around 3.4% now. He said such trades had so far accounted for only 27.4 million yuan (about $3.5 million), a very small fraction of the market’s turnover.

(With information from AP)