China’s stock market is facing unprecedented losses as $1 trillion in wealth has been wiped out in two weeks. The country’s largest real-estate firm Evergrande was ordered to liquidate $300 billion last week by a Hong Kong court. The effects of the liquidation are wreaking havoc in China’s Shanghai Stock Exchange (SSE) and the Hang Seng Index (HSI) market. Top stocks with strong fundamentals are crashing in February leading to mounting losses.
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While the bigger investors are initiating large sell-offs and jumping ship, the smaller holders are facing the brunt of China’s stock market debacle. Additionally, foreign capital saw an exodus two weeks ago as institutional investors sold billions worth of stocks. The sell-offs from both institutions and normal investors are causing China’s market to lose balance in the global financial sphere.
Financial analysts predict that China’s market is staring at a crash that could further wipe out trillions. Therefore, China’s market looks to be on the brink of a collapse and the broader Asian stocks remain at risk. Japan’s Nikkei and India’s Sensex and Nifty could also be impacted if China’s market faces a bloodbath.
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China’s Stock Market Regulatory Comes To the Rescue
Considering the alarming situation, the China Securities Regulatory Commission (CSRC) committed to preventing abnormal market fluctuations. CSRC is working towards stabilizing China’s market and stopping it from a potential decline. The move could bring back investors’ confidence in the market if done right. Bringing investors back to the stock market is now CSRC’s primary goal.
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Investor Jim Rogers assured that CSRC’s intervention could bring in positive momentum and stabilize China’s market. “I would suspect that we’re getting near the bottom if we’re not already there because when a government takes strong measures, it usually helps the market,” Rogers said in the interview.