According to Bloomberg, the Shanghai Composite Index has dropped by nearly 25% compared to the beginning of the year, making China a big stock market with the strongest decline in the world 2018.
The booming trade war between the US and China is seen as the main reason why Chinese stocks “evaporate” $ 2.3 trillion worth of capitalization this year.
Along with that, the debt reduction campaign in the economy pursued by Beijing has caused the debt margin on the stock market to fall to about one third compared to the peak in 2015.
Foreign investors continue to buy listed shares in the mainland China market through connection with Hong Kong stock, and Chinese state funds are supposed to intervene in the market to support prices. share. However, the indexes of Chinese stocks have continuously dropped sharply.
In addition to the US-China trade war, Chinese securities investors are also concerned about the slowdown of the domestic economy.
The $ 2.3 trillion capitalization decline of Chinese stocks this year was the strongest since Bloomberg began saving data on this market in 2002. The similar near capitalization of Chinese securities occurred. came into the global financial crisis 10 years ago, when the Shanghai Composite Index dropped 65%.
With the decrease in capitalization, China this year ceded the position of the second largest stock market in the world to Japan.
Along with the decline of the market is the decline of trading volume. The daily average trading volume of the Shanghai and Shenzhen exchanges combined has dropped to about 369 billion yuan, equivalent to $ 54 billion, the lowest level since 2014.
In Thursday’s session, only about 263.8 billion yuan of votes were transferred on both exchanges, about one-tenth of the peak in 2015.
China’s debt reduction campaign has achieved some results, at least in the stock market because of speculative activity.
The total outstanding securities margin is only about 756 billion Yuan on Tuesday this week, about 1/3 of the peak 3 years ago. In 2015, Chinese securities investors borrowed collateral at a record level to buy stocks, leading to a stock bubble.
Many loss investors have fled the Chinese stock market this year. A total of 75 mutual funds with a focus on Chinese securities dissolved in the year, according to Bloomberg data, the highest level ever since the data began to be recorded in 2007. Over the past 11 years , there are 88 Chinese securities mutual funds come to the dissolution outcome.