On the heels of last Wednesday’s 282 point, 6.5%, sell-off in China there was another selloff in China last night (Monday June 4). The Shanghai Index was down 330 points, or 8.26% – comparable the 269 point, 8.85%, sellof heard round the world on February 27.
The immediate cause seems to be a government editorial splashed across the front pages of financial newspapers calling for “rationality” in the market (subscription required). According to the WSJ, the editorial was meant to assure investors that the government isn’t about to precipitate a crash but it seems like it had the opposite effect. “Investors are hard to reassure right now because they believe more tightening measures will come if the marekts continue to rise,” said Zhang Gang, an analyst at Central China Securities.
The selloff has been pretty much a non-event over here with the Dow down about 50 points at the open but recovering almost completely within a half hour.