The Shanghai and Shenzhen markets lost nearly 21 trillion yuan (US$3.38 trillion) in value during the 15 trading days between June 15 and July 6.
Of the 2,469 stocks that traded during the period, 2,370, or nearly 96 percent, posted price falls.
Among them, 878 stocks, or 36 percent, slumped over 50 percent, and 52 stocks plunged by more than 60 percent.
Among the 50 stocks that fell the most, 35, or 70 percent, are from the Small and Medium-size Enterprises board or the Growth Enterprise Market.
Defense plays fell the most, losing 43 percent of their value during the period. Among the 29 normally trading stocks, 24 shed more than 40 percent, and the prices of 10 stocks halved.
The business and trading sectors have also been battered, with an overall drop of 41 percent in value. Of the 81 stocks, 32 fell over 50 percent.
The internet technology sector had a whopping gain of 201 percent from the beginning of the year to June 12.
However, the sector has lost as much as 40.6 percent amid the correction.
Some stocks show reasonable valuations after the deep correction.
And many listed companies have announced share buybacks or plans by major shareholders to buy shares to support their prices.
As a result, 1,321 stocks staged a rebound of 9 percent on July 10.
Many listed firms have stated they will buy back shares once the stock price falls below a certain level.
And some mainland brokerages also pledged not to sell stocks until the Shanghai Composite Index climbs over 4,500 points.
These moves will lend some support to share prices in the short term.
However, the upside will be limited if share prices exceed the buyback levels.
The performance of the stock market is critical for China to fulfill its annual economic growth target.
So, Beijing has been closely watching the equity market.
Premier Li Keqiang has discussed the stock market twice within eight days, stressing that the country is keen to build an open, transparent and healthy capital market.
However, the Chinese authorities have managed the stock market by applying the approach of “crossing the river by feeling the stones”.
That’s why their initial bailout measures, pumping government money into the market, failed to bear any fruit.
They then ordered all listed companies to join the battle to stabilize the market.
The market will closely watch the gross domestic product and other economic data next week.
In an effort to restore confidence in the stock market, the authorities hinted last week that first-half economic growth data was satisfactory.
Nevertheless, I expect that first-half GDP growth is unlikely to have exceeded 7 percent.
This article appeared in the Hong Kong Economic Journal on July 13.
Translation by Julie Zhu
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