(Bloomberg) -- China’s policy makers are stuck with the most bearish equity market in years as attempts to lift sentiment fail to gain traction.
The Shanghai Composite Index slid Wednesday to within 10 points of its lowest intraday level since 2014, ignoring a report in the Securities Daily expressing support for the market and suggesting value investors should start buying. The benchmark made a brief upward foray mid-morning and then retreated, trading down 0.2 percent as of 10:42 a.m.
Many measures this year have spurred temporary rebounds, but they’ve failed to really instill confidence in one of the world’s worst-performing markets. Just three weeks ago, state-backed funds purchased stocks in a move that helped trigger a two-day bounce after the benchmark first dipped below its 2016 closing low.
Hong Kong’s equity markets aren’t doing much better -- the city’s benchmark Hang Seng Index fell into a bear market yesterday and was down 0.3 percent Wednesday.
The steps pale in comparison to policies and restrictions that the government imposed after the 2015 bubble burst, though those backfired as investors considered the moves too heavy-handed. This year’s rout is now nearing $2 trillion, which would be the nation’s biggest wipeout of wealth in any calendar year since the global financial crisis, according to Bloomberg data.
Stocks came under pressure from the government’s deleveraging drive, which triggered higher default rates and tighter liquidity, and then faced further challenges as the yuan weakened and a trade dispute blew up with the U.S. That means the reasons to sell far outweigh the valuation argument. Concern that China’s economy will slow is once again dominating sentiment, just as it did when the Shanghai Composite closed at the 2,655.661 level in January 2016.
It may take more that low multiples for the market to bottom this time round.
