Stocks in China switched between gains and losses today (May 29th) as investors remained on the fence a day after a sharp sell-off which saw the Shanghai Composite Index tumble 6.5 per cent.
Analysts today were trying to make sense of the slide, citing a brokers' tightened margin trading requirements, a Chinese sovereign wealth fund dumping shares in two state banks and the central bank draining liquidity from the market.
"Although numerous triggers have been proposed for Thursday’s nearly seven percent fall in the Shanghai Composite, none of these seem likely to have had a large enough impact on fundamentals to explain such a sizable move," economists at Capital Economics wrote in a note seen by Reuters.
"Instead, it was probably driven by a wild swing in sentiment. With valuations divorced from economic fundamentals, the heightened volatility we have seen is likely to continue."
Investors in the region were also focusing on Greece's talks with its European creditors. The country might miss a debt payment on June 5th if it fails to receive bailout funds from creditors, who are demanding that the country make reforms to its economy.
Athens said it aims to reach an agreement with lenders by Sunday, but its European partners are more cautious.
The Shanghai Composite Index lost 0.8 per cent to 4,585.35. Japan's Nikkei 225 edged up 0.1 per cent to 20,563.18 and South Korea's Kospi added 0.2 per cent to 2,114.80. Hong Kong's Hang Seng remained flat at 27,448.89 while Australia's S&P/ASX 200 rose 1.2 per cent to 5,780.50.
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