Markets quake as Beijing bids to deal with panic selling

GLOBAL stock markets swung violently yesterday after the authorities in Beijing waded in to stop another day of panic selling in China.

The CSI300 index, which tracks shares traded in Shanghai and Shenzhen and crashed 7pc on Monday, fell another 2.5pc in early exchanges yesterday.

But it finally closed up 0.3pc after the stock market regulator and central bank stepped in to restore shattered confidence and prop up prices.

The avoidance of another bloodbath, at least for now, eased rattled nerves in London following the worst start to the year for 16 years.

The FTSE 100 index fell 2.4pc on Monday, its biggest opening day fall since 2000, as the sell-off in China, worries about the global economy, and mounting tensions between Saudi Arabia and Iran hit stock markets worldwide. It clawed back some of the losses yesterday, closing up 43.81 points at 6137.24.

Joshua Mahony, market analyst at trading firm IG, said ‘the worrying start to 2016 continued’ with markets failing to recover their opening day losses.

The China Securities Regulatory Commission said it could extend restrictions on share sales by major investors. The selling ban, which was imposed last summer during the so-called ‘Great Fall of China’ when share prices were tanking, is due to expire on Friday.

At the same time, the People’s Bank of China injected £13.6bn into the Chinese banking system to keep borrowing costs down.

There were also reports that the ‘national team’ of stateowned financial institutions were buying shares while the central bank moved to prop up the battered currency, the renminbi.

Many observers have criticised the Communist government’s interventions, arguing they have kept stock prices excessively high.

Yang Hai, an analyst at Kaiyuan Securities, blamed the current problems on ‘the government’s heavy-handed intervention last year’.