China Stocks Bounce Back After Panic Selling Among Investors

After falling sharply since last two weeks, China's benchmark Shanghai Composite index gained nearly 6 percent on Thursday. Today it is again bouncing up by more than 5 per cent. Beijing took a drastic step on Wednesday, wherein Chinese officials banned the company's major shareholders from selling shares for the next six months which impacted the Chinese market on Thursday. On Tuesday, more than 1400 listed companies halted trading on China's Index after the sharp decline in numbers. .

It is still a question for China, whether this move comes as  a temporary relief or it is a start of  stabilisation. The CSI 300 Index of the biggest listed companies in Shanghai and Shenzhen gained more than 6 per cent on Thursday, but still the investors were nervous. The Shanghai Composite Index rose by 5.8 per cent, and it was the biggest percentage gain in six years. Earlier, the Hang Seng Index dropped by 5.8 per cent on Wednesday and it was the biggest one day percentage fall since the financial crisis of 2008.

China's banking regulator is planning to allow banks to extend mortgages that have used shares as collateral. The Central bank also announced to put 35 billion yuan into the markets. Since 25th June, it is the fifth cash injection carried by the People’s Bank of China.

Currently, the government’s measures are starting to have a positive impact on the market. It is looking like the government plan is likely to be successful, as the market is again back to having sufficient liquidity. The impact of of the rise in the markets in China has boosted global oil prices, with Brent crude surging up by 1.2 per cent to USD 57.72 a barrel.