China has taken over front page today now that Greece has been given a short reprieve as thousands of Chinese companies froze trading on mainland Chinese exchanges Wednesday, shutting down trade on $2.6 trillion of shares, or about 40 percent of the market’s capitalization.
The People's Bank of China said it was keeping a close watch on what was happening and would take appropriate action when and if necessary promising to provide “ample liquidity” to the market and raising margin requirements on small-cap index futures.
The government announced new measures to calm the market but attempts to ease some rules may not be enough for most investors who have already lost confidence in the future of the Chinese markets.
The benchmark Shanghai Composite plunged as much as 8 percent, down over 30 percent since reaching a seven-year peak of 5,166.35 on June 12 while the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 5 percent in early trading.
"Today is all about China, with Greece in the background now that it's been given a new deadline," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo.
Asian Shares Down Across the Board
Shares were down across all of Asia with MSCI's broadest index of Asia-Pacific shares outside Japan dropping to its lowest level since February 2014 and Japan's Nikkei stock index falling 2 percent to a seven-week low.
According to Audrey Goh, investment strategist at Standard Chartered Plc in Singapore, “The selling in China will continue for some time. We need policy makers to come up with more measures to try to restore confidence in the market. The suspension in trading of a number of companies in mainland exchanges isn’t helping to assure investors.”