Chinese stocks fall again

1 March 2007

Chinese stocks dipped again yesterday after a late rally on Wednesday was quashed when jitters once again gripped the market.

Hopes that Tuesdays' four per cent increase was a sign of recovery were dashed with the Shanghai Composite Index showing a 2.9 per cent dip to 2.797.19, as the spate of selling that had followed Tuesdays' 9 per cent drop continued.

The nine per cent drop was the Chinese stock market's largest fall in a decade, and has already had repercussions on the US market with the Dow Jones reporting a fall of three per cent - it's largest since 9/11.

The US economy did $260 million of business with China last year, as the two economies become increasingly intertwined as the major US banks invest heavily in the region.

Commenting on the developments in a BBC interview, Masatoshi Sato of Mizunho Investors Securities said: "Investors are still wondering if the storm is actually over or not. Aftershocks in some markets, where prices are overvalued, may be seen from now on. Volatile and sensitive trading is likely to continue at least until mid-March."

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