China Stock Slump Spreads as Alibaba to JD.com Whipsaw Investors
Source: Bloomberg
U.S.-traded Chinese stocks tumbled the most on an intraday basis in at least four years before rebounding in late trading as the rout thats wiped $3.2 trillion from the value of mainland equities spreads.
Chinese American depositary receipts dropped 3.3 percent at the close of trading in New York, after slumping as much as 9.1 percent. Alibaba Group Holding Ltd. fell 0.8 percent on volume more than double its three-month daily average. JD.com Inc. fell 4 percent after paring a decline of as much as 12 percent.
Stocks fell in the U.S. after the Shanghai Composite Index sank for the fourth time in five days as government measures to prop up mainland markets failed to stop a retail investor selling spree. Even after the median price-to-earnings ratio in China dropped to 55 from 108 at the height of the rally in June, valuations are more than twice as high as those on the Standard & Poors 500 Index.
People have less and less confidence in the governments ability to stabilize the financial market, Henry Guo, an analyst at Summit Research Partners, said by phone on Tuesday. Names like Alibaba and JD.com are, to a certain extent, an indicator in the market. The selloff in these stocks shows the level of bearishness regarding the broader Chinese market.
Read more: http://www.bloomberg.com/news/articles/2015-07-07/china-stock-slump-spreads-as-alibaba-to-jd-com-whipsaw-investors