Friday, June 26, 2015

ecns [expanded by feedex.net]: 'Black Friday' sweeps over stock market

ecns [expanded by feedex.net]

ecns

'Black Friday' sweeps over stock market
http://www.ecns.cn/business/2015/06-26/170866.shtml
Jun 26th 2015, 07:45





Chinese stocks suffered a "Black Friday", with the ChiNext index, a Nasdaq-style board of Shenzhen-listed growth enterprises, plunging 8.9 percent as fears saw leveraged investors jettison their holdings.


The benchmark Shanghai Composite Index dived 7.4 percent to 4,192.87 at the close, its steepest fall in five months, while the Shenzhen Component Index slumped 8.2 percent to 14,398.79.


"Signs of the market edging down have triggered panic among investors, many of whom are leveraged and forced to close their position," said Yang Delong, chief strategist at China Southern Asset Management.


Data showed pullback by leveraged trading as the outstanding balance of margin-debt at the Shanghai Stock Exchange fell from a record high for a fourth day on Thursday to 1.42 trillion yuan ($229 billion).


"The market will remain volatile but likely to rebound if not in a short term," the strategist told China Daily, adding that it's too early to say the country's year-long bull market has peaked.


The market view diverged however as Morgan Stanley advised clients to refrain from investing in mainland shares in a report on Friday, saying the top for the cycle has been reached.


Nearly 2,000 stocks tumbled by the daily limit of 10 percent on Friday, among which technology shares and small companies led the rout.


"The deleveraging is healthier for the market after all," said Yang, adding that he recommends blue-chips whose valuations are below the historical level and defensive sectors such as beverage and insurance stocks.


The Shanghai gauge has surged nearly 30 percent since the beginning of this year and 124 percent over the past year until Thursday.


The CSI 300 Index slumped 7.9 percent to close at 4,336.20 on Friday.




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