Charting the Rise and Fall of China's Equity MarketBy
It’s been a wild ride on China’s equity market, with the Shanghai Composite Index rising from just above 2,400 in November 2014 to a high close of 5,200 in June, before plunging back toward 3,700 in early July. Along the way there have been four rate cuts, three reserve requirement cuts and, most recently, a raft of measures from the government aimed at stabilizing the market. This chart maps out the recent history of policy and market moves.
China's Policy Timeline
Nov. 21, 2014 – The People's Bank of China cuts rates by 40 basis points.
Nov. 30, 2014 – The PBOC publishes draft rules on deposit insurance.
Dec. 17, 2014 – Bloomberg’s Monetary Conditions Index shows conditions tighter than any time in the last decade.
Dec. 28, 2014 – The PBOC changes rules on loan deposit requirements to ease liquidity pressure.
Jan. 19, 2015 – The Shanghai equity market corrects close to 8 percent as regulators clamp down on margin lending.
Jan. 20, 2015 – GDP expanded 7.3 percent year on year in the fourth quarter of 2014, beating expectations.
Jan. 22, 2015 – The PBOC reintroduced reverse repos to meet cash demand ahead of Chinese New Year.
Feb. 4, 2015 – The PBOC cuts the reserve requirement ratio by 50 basis points.
Feb. 14, 2015 – The falling price of Valentine's roses shows deflation risk.
Feb. 28, 2015 – The PBOC cuts rates by 25 basis points.
Mar. 5, 2015 – Premier Li Keqiang cuts China's GDP growth target to 7 percent from 7.5 percent.
Mar. 8, 2015 – China's Ministry of Finance announces a trillion yuan local government debt swap.
Mar. 31, 2015 – The China Household Finance Survey shows the average investor in the Shanghai equity rally didn’t graduate from high school.
Apr. 15, 2015 – Bloomberg's monthly GDP tracker shows growth at 6.5 percent year on year in the first quarter of 2015.
Apr. 19, 2015 - The PBOC cuts the reserve requirement ratio by 100 basis points.
May 10, 2015 – The PBOC cuts rates by 25 basis points.
Jun. 10, 2015 – MSCI stops short of including China A-shares in the global benchmark.
Jun. 10, 2015 – China's Ministry of Finance expands its local government debt swap to 2 trillion yuan.
Jun. 19, 2015 – A 6.4 percent fall in the Shanghai Composite Index raises fears of an equity correction stifling the country's economic recovery.
Jun. 24, 2015 – The PBOC scraps the loan deposit ratio cap.
Jun. 27, 2015 – The PBOC cuts rates by 25 basis points and the RRR by 50 basis points for select banks.
Jul. 5, 2015 – IPOs are suspended, major brokers launch a market stabilization fund and the PBOC announces liquidity support for margin finance.
Tom Orlik is an economist with Bloomberg Intelligence. This post is courtesy of Bloomberg Intelligence Economics.
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