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Tightened Regulations Pushed the Chinese Stocks Down

April 25, 2017
By Daisy Joseph
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The Chinese regulators are fierce against the speculative trading praises and shadow banking. In an attempt to reduce capital outflow, the regulators have tightened the conditions. As a result, the Chinese market faced one of its biggest downfalls in the year, losing about 1% just in a day.

The Chinese economy is the second largest economy in the world and the economy is expected to tumble due to the policies of USA. Market confidence has lowered after numerous initial public offerings. These will further add pressure to the already weakening market.

Chinese officials have however brushed aside the concerns stating that the Chinese economy is stable and it provides good opportunities for the investors. The supervision control will reduce the risks and it would encourage the leverage in the whole financial system. Interbank trading increased in the last week while some institutions were put down by the liquidity pressure. The officials added that this will add stability further.

The comments made it clear that the government won’t pitch in to rescue the fall of the Chinese stocks as it did in 2015. Since April, the Chinese stocks have been losing and the investors lost a greater share of their gains. The stock market lost as much as 3% in this month.

The Shanghai Composite Index lost 1.4%, which is the biggest fall in 2017. The CSI300 index also lost 1.0%. The Q1 data was in fact favorable for the economy, but the investors are more worried about regulatory risks.