China might be keeping its citizens in dark regarding market plunging. China’s market has plummeted but its authorities are not letting the citizens know about this bizarre. As observed that earlier this month the head of China’s banking and insurance coverage regulator recognized US monetory markets as the best danger to the world. He even mentioned that China is very involved in this overseas asset market. Now China has claimed that they have banned the term stock market from social media searches. But it was seen that there were no such references found to the plunge in the market in its major financial newspapers. This seems to be an issue that why the country is hiding the plunge in the market from its citizens. Let’s have a look at what the plunge is.
The Plunge in China
This is observed that the market has fallen nearly 14% in just a couple of weeks. China’s Hong Kong-listed tech stocks have fallen down by 35%. China’s market has been trading at record levels last months before the sell-off started. It has wiped off more than $1.7 trillion in value. As the tech companies of the country were trading on the valuations which were looked so cheap. However, the country has now observed that danger is from its own stock market bubble.
China’s market response in pandemic
As we have seen that China’s response to the pandemic was very different from all other countries. The way they have reacted towards monetary disaster in 2008 was also one of the largest, of any financial system in the world. At that time the county was left with a legacy of debt and wasteful capital utilization that’s it’s nonetheless grappling with. Due to the pandemic the country has saved, its rates of interest increased. This had kept the country in financial recovery and it has monetary stability.
As the country does not thinks that this plunge in share price is a problem. As the speed at which prices were unwound and the risk that could ignite full blow panic selling. It is specifically threatened to financial stability. As they believe pandemic has deleveraged its economy and drainage of excess liquidity in the financial system.