Chinese shares came back slightly on Friday after plunging drastically the day before, but couldn’t prevent investors from remaining skeptical that the equity market was turning around.
Following the tighter margin trading requirements implemented by the government, many investors sold off their stocks sending the Shanghai Composite Index on a roller coaster ride, diving down 7 percent at one point and ending the day up 0.5 percent. Despite the drop, the index remains up a staggering 43 percent so far this year.
"The correction is not yet over," said David Dai, Shanghai-based investment director at Nanhai Fund Management Co Ltd. "Yesterday's slump was too rapid, so many investors didn't have time to flee. Many are still seeking an exit. The market has risen too much, and too fast, so the confluence of bad news is causing panic selling."
Asian Shares Up
Meanwhile, Asian shares were up with the MSCI's broadest index of Asia-Pacific shares outside Japan climbing 0.5 percent and gaining nearly 7 percent so far this year.
The dollar withdrew against the yen, hitting 123.73, its highest rate since 2002. The greenback lost ground as a result of the severe language used by Japanese government officials’ to describe recent moves, with Finance Minister Taro Aso pointing to the yen's recent drop as "rough."
Investors are still cautious regarding the euro as talks with Greece slow down to a halt. The currency was up 0.1 percent at $1.0957 after pulling away from a one-month low of $1.0819 EUR.