Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China’s Worst Rout in Years Has 3,257 Stocks Falling by Daily Limit

Stock MarketsFeb 03, 2020 04:24AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.

China’s stock market opened to the most savage wave of selling in years, with thousands of shares falling by the daily limit after just minutes of trading.

Though investors turned on computers hours early to tee up their sell orders, many of them couldn’t exit the market fast enough. All but 162 of the almost 4,000 stocks in Shanghai and Shenzhen recorded losses, with about 90% dropping the maximum allowed by the country’s exchanges. Health-care shares comprised most of Monday’s gainers on speculation they will benefit from the virus outbreak.

“The sell-off was so quick and intense,” said Li Changmin, managing director at Snowball Wealth in Guangzhou. “We’ll be busy dealing with risk controls and even liquidation pressure if stocks keep falling.”

While it was always going to be brutal for China’s $7.5 trillion stock market as investors caught up with losses worldwide, Monday’s declines were particularly severe. The CSI 300 Index sank as much as 9.1% -- a slump rarely seen in its almost 15-year history. The huge number of stocks trading limit down means it could take days for investors to execute their orders, prolonging the sell-off.

“I was anxious before the market opened, and had made plans on what to sell and by how much last Friday,” said Bruce Yu, a fund manager with Franklin Templeton SinoAm Securities Investment Management Inc. in Taipei. “Some of my trades weren’t made today -- we’ll see if we can sell them tomorrow.”

Making matters even more difficult for mainland-based traders was that many couldn’t trade from the office, and some had to do it with a reduced working force. Some of the country’s largest cities -- including Shanghai -- extended the Lunar New Year holiday until the end of the week, while Beijing’s government encouraged residents to work from home.

It was the first chance mainland investors had since Jan. 23 to trade, due to the extended Lunar New Break. Officials urged investors to evaluate objectively the impact of the coronavirus, which has killed more than 360 and spread to more than 17,000 people in China alone.

The sell-off was widespread on Monday: commodity futures from iron ore to crude sank by the daily limit, and the yuan weakened past a key level against the dollar.

Fund managers hit the phones to calm investors, seeking to avoid the kind of redemptions and forced selling seen as recently as 2018. China’s securities regulator took steps to support the stock market, telling some brokerages that their proprietary traders aren’t allowed to be net sellers of equities this week, according to people familiar with the matter.

“My biggest concern was that investors would rush to redeem their holdings in private and mutual funds,” said Jiang Liangqing, a money manager at Ruisen Capital Management in Beijing whose team is working from home across China. “A key task for us is to reassure our fund holders and ask them to stay calm.”

Some avoided the market altogether, deciding there was no point trying to get orders through if it meant selling at such a deep discount.

“I had a look at stocks at the open, grabbed my fishing pole right after and left home,” said Yin Ming, Shanghai-based vice president of investment firm Baptized Capital. “What else can you do? I knew the market would be ugly today but didn’t expect a drop of this magnitude.”

Others were brave enough to buy, keeping their cool as China attempted to stem the panic. The central bank took its first concrete steps to cushion the economy and plunging markets from the blow of the coronavirus, providing short-term funding to banks and cutting the interest rate it charges for the money. Investors purchased $2.6 billion worth of onshore stocks on Monday through exchange links with Hong Kong, the second-largest amount on record.

“Buying is all I’m doing,” said Hou Anyang, a partner at Shenzhen Frontsea Asset Management, who was one of four working Monday out of a team of 20. “I’ve been through the circuit-breaker of 2016 and other big routs -- as a professional investor, this is a huge opportunity.”

China’s Worst Rout in Years Has 3,257 Stocks Falling by Daily Limit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email