Chinese stock markets slumped more than 8 percent on Wednesday, reaching the biggest one day drops in eight years, as companies halted trading to guard themselves from large losses in the unhealthy stock exchange.
The main markets of the world’s second largest economy fell sharply on the markets open as more than 500 companies stopped trading reaching a total of number of 1300 despite desperate measures taken by Chinese regulators.
Deng Ge, a spokesman for the China Securities Regulatory Commission, said in a statement that “irrational selloffs have increased greatly and that has led to a liquidity tension in the stock market.” He also described the current market mood as “panic sentiment.”
The Shanghai Composite Index opened at 8.2 percent on Wednesday morning but climbed back down by 4 percent by midday. The Shenzhen Composite also suffered a loss falling 3.9 percent while the CSI300 Index of China's biggest companies declined by 4.8 percent.
China’s stock market has currently depreciated 30 percent in comparison to its peak in mid June, loosing nearly $3 trillion in market capitalisation.
A number of support measures initiated by the government such as direct purchases of blue chips and the pledged liquidity support by the central bank has failed to boost investor confidence.
On Wednesday morning, the stock board spelt trouble as close to 1,439 stocks fell while only 83 managed to rise.
Recently, S&P sovereign rating managing director Moritz Kramer touched on the troubled Chinese economy warning that “the problems facing China were a bigger threat to the global economic outlook than events in Greece."