Analysis Of The Shanghai Stock Exchange Composite Index

Prior to the onset of the stock market crisis, the Shanghai Stock Exchange Composite Index reached 3234.68 points on the final trading day for 2014 following a steady increase in share market prices. This reflected a 52.87% annual increase in the previous year, (Liu, 2015). Simultaneously, China 's economy began to deteriorate. The share market reached its peak on June 12th 2015 trading at a record 5166.35 points, a 59.75% annual increase the previous year, (Liu, 2015). Financial capital was used to purchase additional shares for over 80% of retail Chinese investors. This demonstrates a reflection in both herding behaviour (following the crowd) and being unacquainted with domestic and international share market trends given the nation 's investors …show more content…
Total share liquidations amounted to RMB 360 billion (US$55.32 billion) in the initial six months of 2015 for the 1072 listed corporations on both the Shanghai Stock Exchange and the Shenzhen Stock Exchange. During April 2015, the Shanghai Stock Exchange Composite Index reached 4000 points, resulting in further liquidation of shares in exchange for cash. Company performance was increasingly affected by capital outflow and negative sentiment of the Chinese economy, (Liu, …show more content…
Firstly, the article focuses on wealthy Chinese investors in contrast to ordinary Chinese low to middle class investors. A high net worth Chinese investor would have the capacity to absorb the overall gains or losses in a fluctuating share market in contrast to a low or middle income Chinese national, (Liu, 2015). Second, the six month prohibition from share market liquidation is temporary in nature and only applies to secondary market transactions. Primary market or private transactions between financial institutions or individual alike remain unaffected by the share market crisis, (Liu,