China’s $345 Billion Stock Rout Shows Beijing’s Fear of Bubbles
- Shanghai Composite sinks 4.4%, ends eight-week winning streak
- World-beating rally had fueled concerns about overheating
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It started with a single sell rating on one stock. By the time China’s exchanges shut on Friday, equity investors were sitting on $345 billion of losses and the realization that Beijing is in no mood for another bubble.
The bearish call on shares of a state-owned insurer, delivered by analysts at China’s biggest state-owned brokerage, was widely interpreted as a sign that the government wants this year’s world-beating surge in Chinese stocks to slow down. The Shanghai Composite Index tumbled 4.4 percent, snapping an eight-week winning streak and closing at its low for the day after disappointing export figures gave investors another reason to sell.