Mainland stocks stabilize after previous-day sharp slump

The Chinese stock market stabilized on Tuesday with little fluctuation after a sharp decline the previous trading day, the worst post-National Day holiday stock performance in years.

As of closing time, the Shanghai Composite Index edged up by 0.17 percent to 2,721 points, while the Shenzhen Component Index slumped by 0.18 percent to 8,046 points.

A total of 36 stocks surged to their daily trading limit of 10 percent, with medical shares leading the rally.

The rebound came after a sharp decline of the two bourses on Monday, the first trading day after the National Day holidays, which has been unexpected in the past. Mainland stocks usually rose on the first trading day after the weeklong National Day holidays.

On Monday, the Shanghai market closed at 2,716 points, plunging 3.72 percent from the previous session, while the Shenzhen market closed at 8,060 points, down by 4.05 percent. The slump has erased much of the stock rally since mid-September.

Experts have reassured that the positive effect of the recent reserve requirement ratio (RRR) cut on Ashares will manifest in the coming days.

Dong Dengxin, director of Wuhan University of Science and Technology’s Finance and Securities Institute, said that the A-share market is still in a process of building the bottom, and the market rebound since midSeptember and the slump on Monday can both be deemed as “normal” fluctuations.

“The market had rebounded about 200 points ahead of the National Day holidays, so the markets gathered pressure for correction,” Dong.

He predicted that the A-share market won’t encounter too strong of a fluctuation in the remaining months this year, but with the four-year cycle [of bullish and bearish market], the mainland markets are very likely to have a firm rebound in the second half of next year.