The difference in global time zones often plays to investors’ advantage, allowing them to trade almost 24/7 on markets all over the world and traders can jump in long before Wall Street wakes up for its morning session.
This difference in times has been providing investors in the second largest world economy with additional opportunities. In an effort to calm the markets, the government has stepped in and has been buying up equity shares. This influx of funds, which has taken place each afternoon at 2:00PM in China, has enabled Chinese markets to rally substantially, which may prove to be a temporary solution to a deeper problem but meanwhile offers investors some semblance of market stabilization along with investment opportunities.
With government intervention, China’s SSE 50 Index of large-capitalization companies has rebounded by an average 6.4 percent in late trading from session lows. The gauge surged 15 percent over the four-day period, its biggest rally since 2008 and twice the 8.1 percent gain by the Shanghai Composite Index.
Banks led the last-minute rally by the SSE 50 gauge on Tuesday while Industrial & Commercial Bank of China Ltd. jumped 7.4 percent, erasing a 0.5 percent loss. Agricultural Bank of China Ltd. advanced more than it has since July 7 and the Shanghai Composite dropped 1.2 percent after falling more than 4 percent early in the session.
Millions Leaving Markets
According to one unofficial report, 90 million individual investors have already pulled out of the markets, with margin debt in Shanghai falling by $10 billion over the past four days to the lowest level since Dec. 25.
The government chose to intervene at this time just days before the WWII victory parade which is scheduled to take place Thursday and will be used to demonstrate the country’s increased military and political strength over the last 70 years.