BLBG: China's Stocks Cap Biggest Selloff Since 2008 on Rescue Doubts
China’s stocks fell, capping the benchmark index’s biggest two-month tumble since 2008 amid growing concern that government intervention to prop up the market will fail.
The Shanghai Composite Index dropped 0.8 percent to 3,205.99 at the close, paring a loss of as much as 3.8 percent. The SSE 50 Index, representing the biggest stocks in Shanghai, rallied as much as 6.7 percent from the intraday low. Citic Securities Co. slid 5 percent after Xinhua News Agency reported that company executives were detained on suspicion of insider trading and the securities regulator was said to order the brokerage industry to boost its contribution to the nation’s market rescue. Bearish bets in the options market climbed as traders weighed the level of state support before a World War II victory parade this week.
Swings in Chinese markets this month have rattled investors worldwide as they struggle to anticipate policy actions in the world’s second-largest economy. Stocks rallied almost 10 percent over Thursday and Friday on speculation authorities are propping up markets before President Xi Jinping takes the stage at the parade, which the government will use to demonstrate its rising military and political might.
“There is a lot of confusion about purchases of stocks by state-linked funds,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “Disclosures are very limited so it is impossible to know what they are doing with certainty.”
