The Chinese stock market has had a disastrous few weeks, with several Chinese companies wondering how they will recoup their loses. Everyone is wanting someone to blame for the fall of the Chinese stock market, days after some Chinese brands entered into the market. The latest blame is being placed on a financial information who is partly owned by Jack Ma, Alibaba’s group founder. Ma has denied the responsibility for the crash, after regulators have visited the offices and looking for the violation that is being rumored.
The media is reporting that Hundsun Technologies based in Hangzhou, was lending ‘gray market’ money to investors, who were then turning around and investing these into the stock market. This type of borrowing is being blamed for the falls that many China stocks saw.
The issue arose when those who had borrowed money were being faced with their repayment times. They then had to sell of stocks in order to repay this money, resulting in the value of the stocks plummeting.
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Hundsun has been given a clean slate of any wrong doing when it comes to being held entirely responsible for the fall of the Chinese stock market. The Chinese regulators have said that their transactions were only a small percentage of the total. However, the Chinese media has taken this tidbit of information and ran with it, running away from the actual truth of the story.
The facts are that from June 15 to July 10th, there was 30.1 billion yuan liquidated through the HOMS platform. Hundsun stated:
“[These trades] accounted for 0.1 percent of the total transactions volume during the period.”
This shows that Hundsun did not have as big of a role in the fall of the stock market as the media were trying to blame. The market volatility has forced many companies to cease trading on the market in hopes of avoiding all the damage. However, professionals are warning that those companies who are not trading and resume this later, could find that this is going to add to the instability within the market.
Due to so many companies no longer participating on the market, many companies are finding it harder to secure financing via the stock market. This has led to many companies to look for personal and business finances among those who are already established. Such is the case with YY,Inc. In this situation, the CEO has offered to purchase the company with his own personal finances. Read more about this story at YY Inc. Bypasses Market Controls.