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China’s stock markets plunge despite efforts to curb selling

Since mid-June, China’s two main stock markets have seen drastic drops, falling by more than 30 percent. In the past year, reforms toward greater liberalization had helped the markets skyrocket, but this recent free fall has spurred some panic among Chinese investors and concern abroad. Chief foreign affairs correspondent Margaret Warner reports.

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    The Chinese stock market has been in freefall over the past month, spurring worries that the contagion could spread beyond the massive nation's economic and political borders.

    Margaret Warner has the story.


    Another brutal day ravaged China's two main stock markets in Shanghai and Shenzhen, as a three-week plunge accelerated.

    Small investors, who make up 85 percent of China's traders, have been hit hard, people like 67-year-old He Meizhen.

  • HE MEIZHEN, China (through interpreter):

    When I look at the index, I feel nervous all over my body. I worry so much. The market opens with a plunge to its daily limit. How can we stand it?


    The benchmark Shanghai Composite Index lost another 6 percent of its value. It's down more than 30 percent since mid-June, and by day's end, nearly half of all stocks on the two exchanges had stopped trading, all of this despite a series of drastic moves by Beijing to rein in the selling.

    Financial analyst Michael Every in Hong Kong says, so far, nothing's worked.

    MICHAEL EVERY, Head of Financial Markets Research Asia-Pacific, Rabobank: Will they suspend the entire market? Possibly. I don't think anything can be ruled out if we keep seeing 8 percent falls day after day after day. One would hope not, because China was supposed to be moving towards greater reforms in the financial market area. And everything they are doing at the moment is backsliding from that.


    Those reforms toward greater liberalization have been pushed by President Xi Jinping. And for a time, the markets skyrocketed. From mid-June 2014 to mid-June 2015, the Chinese markets gained 150 percent.

    Even after recent losses, their value is still up 70 percent from a year ago. Chinese regulatory officials now complain of irrational selling driven by a panic sentiment. Others worry about what desperate investors might do.

  • MAN (through interpreter):

    The people work hard to make money. They are not bosses. They work hard. Older people use their retirement payment, like us, selling things on the street to make some money. People might kill people or set fire to things. People might die.


    U.S. officials are also watching closely. Treasury Secretary Jack Lew counseled calm today.

    JACK LEW, Secretary of the U.S. Treasury: I will say that China's markets are still pretty much separated from world markets. They're obviously moving towards being more integrated, but right now they're not. So you're not going to, I don't think, see the direct linkage there. I think the concern that is a real one is, what does it mean about long-term growth in China?


    Still, there is some spillover: Hong Kong's main index dropped sharply today, as did Japan's, South Korea's and Australia's.

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