China’s top stocks were mixed on Tuesday after recent talk that the government would clamp down on stock speculation.
CHINA 50 – Daily Chart
The price of CHINA 50 saw selling on Tuesday but it was mostly erased by buyers. The range is still defined between 14,551 and 15,042, and any breakout could see an extended move.
China’s financial regulators are reportedly exploring measures to cool the market amid concerns about the rapid pace of a US$1.2 trillion rally since the start of August.
The measures being suggested include the removal of some short-selling curbs, according to sources. Authorities are also said to be looking at ways to control speculative trading over concerns that a sharp reversal could create heavy losses for retail investors.
The boom and bust of 2015 lingers, and officials want to see steadier gains that can help boost consumer sentiment. The current mixed trading environment may be a sign that traders are hesitant about potential moves.
China’s top stock index has gained around 20% from the April lows and reached a ten-year high. Brokerages have been told not to aggressively push their services after retail investors opened 166% more accounts in August than the same month last year.
More than 400 mutual fund products have announced a halt or cap on subscriptions in August, according to reports. Trading volumes on mainland exchanges surged to their second-highest level ever in August, with margin transactions passing 2015 levels.
The underlying economy has still been a mixed bag, and regulators are concerned that the stock run could move too far. That will be a dynamic to consider with each push toward resistance levels in the China 50.
