China’s Stock Market Bubble Bursts

The Shanghai Composite Index fell 5.

9 percent on Wednesday. The Shenzhen Stock Exchange, China’s second largest stock market, fell 2.

5 percent for the day and nearly 40 percent since it peaked in mid-June. Well before markets closed in Shanghai, stocks for more than a third of listed companies had suspended trading, having plummeted below the minus 10 percent daily threshold set by the Chinese government. In Shenzhen, more than 50 percent of shares had been taken off the market by day’s end. Had the government not suspended trades on more than 1,300 companies’ stocks, overall declines would almost certainly have been steeper.

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