FX.co ★ China Stocks Stabilize After Sharp Selloff

The Shanghai Composite index remained relatively unchanged at approximately 3,766, while the Shenzhen Component index rose by 1.1%, reaching 12,252 on Friday. This stability in mainland equities follows a significant sell-off in the previous session driven by renewed regulatory concerns. On Thursday, it was reported that financial regulators are considering implementing measures to cool down the market due to apprehensions about the rapid pace of a $1.2 trillion rally that has been ongoing since early August. Suggested measures include relaxing restrictions on short-selling and increasing oversight of speculative trading to mitigate the risks of severe losses for retail investors. In August, Chinese stocks surged by 10%, bolstered by substantial fund inflows and unprecedented margin financing, with artificial intelligence and semiconductor sectors leading the way. Despite these movements, both the Shanghai and Shenzhen indices have suffered declines of over 2% and 3%, respectively, this week.