China’s Stock Market Falls Below 3,000 Points Once More, Despite Efforts to Intervene

Analysis

After experiencing six consecutive weeks of decline and failing to maintain the 3,000-point threshold on the Shanghai Composite Index, China’s stock market ended the first half of the year on the decline, with a volatile rebound on June 28. Despite this, it still fell short of reclaiming the crucial 3,000-point mark.

This comes despite a series of new measures rolled by the Chinese Communist Party (CCP) to rescue the market, following the February crash.

There are many reasons why China’s stock market has fallen below 3,000 points again, Qin Peng, a U.S.-based current affairs commentator, told The Epoch Times.

“The stock market is a barometer of the overall internal and external political and economic environment. Now, China’s entire economy is declining. Yet the CCP’s bailout has not addressed the fundamentals of the economy, so its effect is limited,” Mr. Qin said.

He said that the CCP has made some effort to save the real estate sector and promote the expansion of exports. But in terms of boosting domestic consumption, its efforts have just been propaganda and lip service, as the authorities have completely dismissed the idea of giving people the money to stimulate consumption.

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Throughout the first half of this year, while global stock markets averaged new highs, China’s stock market performed poorly, with all three major indices falling. Out of more than 5,300 listed stocks, fewer than 800 recorded gains.

The Shanghai Composite Index had breached the 3,000-point level multiple times since February. The latest downturn began on May 20, with the index dropping to a low of 2933.33 on June 21.

On the afternoon of June 26, the three major indices rebounded amidst fluctuations, with over 4,500 stocks rising on the Shanghai and Shenzhen markets. The rebound was partly attributed to significant stock buybacks by central and state-owned enterprises, according to local media.

However, on June 27, the A-share market opened and closed lower, with the overall situation reversing from the previous day. More than 4,700 stocks fell, and trading volumes in the Shanghai and Shenzhen markets continued to shrink for the third consecutive day.

Mr. Qin says that China’s private companies have basically stopped investing and expanding. “In the absence of an overall economic recovery, saving the stock market is just empty talk,” he said.

Another reason why China’s stock market is unlikely to improve, according to Mr. Qin, is that the stock market was originally designed by the CCP’s powerful families for the purpose of raising capital and taking money from the stock market through IPOs.

“The packaging of IPOs is fake, and the issuance of shares and fixed-rate increases are also fake, and there is no real legal mechanism for supervision, and the penalties imposed on one or two people every now and then are just small fines to deceive people,” he said. “Shareholders have been deceived, cheated, and disappointed over and over again, and have lost a lot of money in the end. Now, a lot of people have run away and stopped investing in A shares.”