New York (HedgeCo.net) – The Chinese government has been acting fast in the past few days. After cutting rates for the past three years in order to boost GDP growth back to the levels the country was seeing in 2010 and 2011, now regulators have cut interest rates in an attempt to stop the selloff the stock market has been going through in recent weeks.
After peaking on June 12, the Shanghai Composite Index (SSEC) fell 21.55% through June 29. The recent rate cut that was effective as of June 28 did little to stem the selling on Monday as the benchmark index fell another 3.3%, but after opening lower on Tuesday, the index experienced a mid-day turn around. By the end of trading on Tuesday, the index was up 5.5%. Despite the recent swoon, the SSEC was up over 32% during the first half of 2015.
Interestingly, there was a feature in the HedgeCoVest newsletter on June 23 about how not all Chinese stocks were rallying and that the tremendous gains were not evenly distributed and were not benefitting all investors. It was also pointed out how the managers on the HedgeCoVest platform were not actively trading Chinese stocks nor were they trading the overall market in China. From the time that article was published through the close on June 29, the SSEC lost 11.4%.