After a brief respite on Monday, the Shanghai Composite Index headed steeply south again today (July 7), and despite a late trading rally ended down 1.26% for the day. Shenzhen’s composite index fared much worse, falling 5.36%.
Nearly 800 of Shanghai and Shenzhen-listed stocks have voluntarily suspended trading—or 27% of the total listed companies, the Securities Times reported this morning, (link in Chinese) thanks to the “irrational market slump.” Companies listed in Shanghai and Shenzhen can opt to stop trading pending the announcement of market moving information like major projects, but market sources told Reuters that they thought these companies were just trying to ride out the market’s fall. The suspensions certainly picked up in recent days:
These companies could technically remain suspended for as long as several months, which might give the market time to turn around. But their opting out of the market when things are down isn’t going to give investors much confidence in these companies’ corporate governance.
Additional reporting by Zheping Huang.