The Chinese stock market continues its collapse despite all the efforts by the country’s government. The Shanghai Composite Index plunged by 8.5 percent – the worst decline in eight years. China’s stock slump was followed by the European markets.
According to a number of experts, economic growth rates in China have fallen substantially. Despite the official data claiming the opposite, there are growing concerns over the current situation supported by lower profits of Chinese manufacturing companies.
In mid-2014, there was a substantial rise in China’s stock market. The indices surged as fast as the number of new broker accounts. Traders mainly used margin trading. In the early summer of 2015, the stock indices crashed for the first time. After the second tough trading day, they rapidly nosedived. Open positions led to margin calls expanding the decline.
In order to stop the crash in the stock market, the country’s government took unprecedented measures: it banned major shareholders from selling their stakes, halted stock trading for around 1,400 companies, and restricted short sells. Moreover, the country’s authorities allocated funds for financial institutions to buy stocks. However, they did not succeed in curbing the fall. As a result, numerous participants of the Chinese stock market have lost their money and do not intend to go back to trading.
