beijing china stock market shanghai
A man watches a board showing the graphs of stock prices at a brokerage office in Beijing, China, July 6, 2015. REUTERS/Kim Kyung-Hoon


Having managed to stabilize China’s larger stock indices – the Shanghai Composite and CSI 300 yesterday – Chinese policymakers have implemented additional measures to stabilize the market for smaller stocks.

According to Xinhua, a daily trading limit for the CSI 500 index will be effective from Tuesday, the latest action by China’s financial regulators to prevent more losses. Overnight China’s financial futures exchange said it would limit investors’ daily purchases of CSI 500 index futures to 1,200 lots for rise and fall.

The exchange also stated it would step up efforts to investigate illegal market activities.

The CSI 500 index, comprising the 500 largest companies listed in Shanghai and Shenzhen, has had a particularly bad time of it recently. On Monday, despite gains of 2.42% and 2.90% for the Shanghai Composite and CSI 300, the index fell 1.62%, taking its losses from June 12 to 37.71%.

Over the weekend measures were announced to support larger Chinese stocks with 21 major securities brokers promising to spend no less than 120 billion yuan ($US19.62 billion) on exchange traded funds (ETF) that track the performance of blue chip stocks. They brokers also outlined plans to halt selling stock until the Shanghai Composite index rose above the 4,500 points level while 28 companies which had obtained permission to make an initial public offerings postponed their share issuance.

Central Huijin Investment Company, the investment arm of the central government, also announced it had purchased ETFs and would continue to do so in order to bolster nervy investor confidence.

As reported by Business Insider