Shanghai Stock Exchange Closes Up 1.49%... 'Regulatory Shock' Eases

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Shanghai Composite Index closed higher on the 29th. Although the stock market experienced a sharp plunge in recent days due to regulatory risks from Chinese authorities, the market showed signs of stabilization as stock prices turned upward on this day.

According to Bloomberg and other sources, the Shanghai Composite Index closed at 3,411.72, up 1.49% from the previous trading day. After falling for four consecutive trading days from the 23rd to the previous day, it reversed to an upward trend on this day. The Shenzhen Index closed at 14,515.32, up 3.04% from the previous trading day.

The Hang Seng Index of the Hong Kong Stock Exchange, where major Chinese internet technology companies are listed, surged nearly 3% as of 3 p.m. local time. Tencent and Alibaba rose by more than 10% and 7% respectively during the session, and most technology stocks surged simultaneously.

Earlier, as the Chinese government effectively 'forced the dismantling' of the private education market, stock prices of Chinese companies plummeted in mainland China, Hong Kong, and U.S. stock markets from the 23rd to the 27th. This was due to concerns that Chinese authorities might expand market regulations further.

However, after Chinese authorities issued messages indicating restraint in expanding regulations, the market appeared to stabilize on this day. Xinhua News Agency released a commentary stating that there is no fundamental change in the country's reform and opening-up policy direction, including capital market development.

The Wall Street Journal (WSJ) and others also reported that Fang Xinghai, Vice Chairman (vice ministerial level) of the China Securities Regulatory Commission, stated in a private online meeting with global investment banks such as Goldman Sachs that before introducing new policies, they would review market shocks and allow sufficient time for the market to absorb them.