After soaring to seven-year highs in June, China’s stock markets have plummeted badly—the Shanghai Composite, the main index, losing an astounding 29 percent in just a few weeks. Since the peak of the market on June 12, over $2.5 trillion in value has been wiped out. The result has been a political panic.
The Ministry of Finance and large brokerage houses have stepped into the breach, promising to pump nearly $20 billion into the market to maintain prices.
On the Shanghai and Shenzhen exchanges, as of July 8, nearly half of all companies have stopped trading, according to data by Wind Information, as cited by the Hong Kong-based Phoenix Television. After market close on July 7, more than 600 companies applied to have their tickers stop trading, which, added to those already suspended, brought the total number to 1,400. This means that prices are frozen where they last traded, but investors’ capital is trapped.
