China’s stock markets are notoriously volatile and largely led by less-savvy retail investors who sometimes trade on wild speculation. While global markets are often affected by rumor-mongering, mainland markets are still developing and so are characterized by giant swings. For instance, trading is automatically halted if a stock moves up or down by 10 percent. That’s a way to smooth out less mature markets, but it at times does little to calm volatility and inspire investor confidence.
On Thursday, shares of Wanda Film tumbled nearly 10 percent before trading halted, and the firm later denied rumors that banks had been ordered to dump company bonds in a statement posted online. It wasn’t until Friday that the company issued stock exchange filings.
China is interested in attracting more foreign investors as it has expanded “stock connect” programs to give more access internationally to mainland markets. And just this week, domestic stocks finally won inclusion in MSCI’s benchmark emerging markets index, but experts say market transparency and regulation remain an issue.