For one hour every day, the Chinese stock market boom goes bust

The strange daily phenomenon that affects China’s state-backed stocks

Hazel Sheffield
Monday 11 May 2015 10:59
Comments

China’s Shanghai Composite stock index of state-backed companies has looked unstoppable over the past 30 days as it added 545 points or 15 per cent of its value.

But during one hour of the afternoon – between 1.20pm and 2.20pm – the bottom falls out the index. If value of its stocks didn’t make a swift recovery the losses for investors would be catastrophic.

So far, it always has. The Shanghai Composite Index has fallen on 19 of 30 sessions in what Bloomberg reports is one of the most consistent declines. But over time, the trend has been upwards.

What’s behind the phenomenon? No one can say for sure.

One strategist told Bloomberg that the Chinese investors are choosing the after lunch slot to start selling, given that Shanghai shares are up 109 per cent on last year.

Another said that overseas investors, which wake up later in the Chinese day, are more likely to streamlining their portfolios.

Others said the swings might attract traders of index futures, who try to guess the future value of the index.

“Definitely people are looking at it,” Brett McGonegal, executive managing director at Reorient Group Ltd., a Hong Kong-based advisory firm, told Bloomberg. “Once the needle moves, you have a lot more that goes behind it. Computers pick it up very quickly.”

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in