Chinese Markets: Panic Selling
June 5th, 2007Via: Reuters / Yahoo:
China stocks tumbled 8.3 percent on Monday in their second biggest drop this decade, erasing $340 billion in market value and extending big losses from last week after the government hiked the share trading tax to cool a feverish bull run.
In an apparent attempt by authorities to restore confidence, front-page editorials in official newspapers tried to reassure investors the market’s medium- and long-term outlook was still positive, and that the tax hike was merely aimed at speculators.
But that failed to stop selling by many of the anxious and often inexperienced individual investors who had jumped into the market in recent months for what seemed like easy money.
“This is obviously panic selling, and the sentiment is quickly spreading across the market,” said Wang Jing, deputy general manager at Everbright Securities.
…
The key index has now lost 15.3 percent from last Tuesday’s record intra-day high. A fall of 10 percent is an internationally accepted definition of a bear market in stocks.
Tonight we gonna party like its 1929!
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/IgnoringTheLessonsOf1929.aspx
“The economic and financial landscape of 2007 bears striking similarities to 1929. Back then, there were large, unregulated pool operators and other insiders constantly muscling the tape in whatever direction they chose. The public, too, was involved, thinking the country was experiencing a new era. Meanwhile, business began deteriorating in the spring of 1929, though the partying in stocks lasted until the fall.”