Chinese shares closed sharply higher on Friday, recovering some of the week’s losses, but still recorded their biggest monthly fall in about seven years, which has knocked 12 trillion yuan ($1.8 trillion) off the value of its benchmark indexes.
The Shanghai Composite Index closed up 3.1%, but it lost twice that over the week and 22.6% since the beginning of January, its worst month since October 2008, when global financial markets were sent into a tailspin after the collapse of Lehman Brothers bank, Reuters reported.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen ended up 3.2% for the day, but lost 21% for the month, its biggest decline since August 2009.
Trading was light throughout the month, as many investors are giving the market a wide berth, burnt not just by January’s slump, which has taken indexes back to 2014 levels, but also last summer’s 40% crash.
Beijing orchestrated a “National Team” response to the previous crash, taking regulatory action to arrest the selling and urging state-linked buyers to support the market, but there has been little sign of that in January.
“Market bulls have failed to organize meaningful resistance, the ‘National Team’ didn’t inspire investors, while speculators chose to stand on the sidelines,” said Zhang Mingyu, chairman of hedge fund house Shanghai YJ Investment Management Co. “The market has been overwhelmed by gloom and looks like a bottomless pit,” he added.
