China stock market freezing up as sell-off ‘stampede’ gathers pace

China’s tumbling stock market showed signs of seizing up on Wednesday, as companies scrambled to escape the rout by having their shares suspended and indexes plunged after the securities regulator warned of “panic sentiment” gripping investors. Beijing, which has struggled for more than a week to bend the market to its will, unveiled yet another battery of measures to arrest the sell-off, and the People’s Bank of China said it would step up support to brokerages enlisted to prop up shares. The CSI300 index of the largest listed companies in Shanghai and Shenzhen closed down 6.8 percent, while the Shanghai Composite Index dropped 5.9 percent.

It’s a stampede. And the problem of the market is that all the players move in the same direction, and are too emotional.

Wang Feng, CEO and founder of hedge fund firm Alpha Squared Capital Co

A surprise interest-rate cut by the central bank at the end of June, relaxations in margin trading and other “stability measures” have done little to calm investors. The barrage of official commentary and new support measures continued throughout Wednesday’s trading session, without visible effect. But the market sell-off has extended beyond the mainland, with Chinese stocks on U.S. exchanges falling as much as 6.1 percent on Tuesday, according to the Bank of New York Mellon index of such securities. Hong Kong’s Hang Seng Index fell 5.8 percent, with shares of Chinese brokerages taking a heavy beating.

I’ve never seen this kind of slump before. I don’t think anyone has. Liquidity is totally depleted.

Du Changchun, an analyst at Northeast Securities