HONG KONG (AP) – Faced with a stomach-turning slide in share prices, many Chinese companies are taking matters into their own hands with a tactic that experts say is bound to backfire: they’re pressing the pause button.
About half of the 2,800 stocks on mainland Chinese markets have been suspended from trading as companies attempt to stem further losses by sitting out the market upheaval.
The trading halts appear to be separate from the flurry of measures rolled out by Beijing over the past week, as the country’s communist leaders made increasingly desperate attempts to stabilize tumbling markets.
The Shanghai Composite Index has dived about 30 percent from its June 12 peak. The steep decline comes after a spectacular rally that sent the Shanghai index up 150 percent in the previous 12 months despite slowing growth in the world’s second biggest economy.
The government fanned the rally by sending encouraging signals through state media that enticed the Chinese public to pile in to the market. But the ensuing downturn and Beijing’s frantic response, which includes banning major shareholders from selling stakes for six months, highlights the limits of its control over the market.