Shanghai Composite posts best day since 2009

The Shanghai Composite has posted the biggest one day gain since 2009 as the Chinese government unleashed another set of measures to boost confidence in the market.

The Chinese government have put selling limits in place to prevent major shareholders liquidating their holdings. Authorities have warned they will enforce the ban on those large shareholders that sell their shares within six months.

The move is one of many interventions by the Chinese government to halt a sell off that has already wiped 30% from the value of mainland equities in the last three weeks.

“A huge amount of wealth has been wiped out … People are underestimating the damage to the real economy,” said Michiro Naito, executive director of JPMorgan in Tokyo.

Indeed, it is very difficult for anyone to sell their shares at the moment as around 50% of mainland shares, worth around $2.6 trillion, have been suspended.

The latest steps by the Chinese government have many doubting that there will be any true reforms of Chinese stock markets in the near future as equities are repeatedly manipulated by liquidity injections, restrictions and speculation that the government will actually begin to buy shares to prop up the market.

The optimism may only be temporary but it was enough to support commodities and in turn FTSE 100 mining companies that were among the top risers in early trading.

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