BEIJING — China’s stock markets face a make-or-break week after officials rolled out an unprecedented series of steps at the weekend to prevent a full-blown stock market crash that would threaten the world’s second-largest economy.
The government is anxiously awaiting the market opening on Monday to see if the new measures will halt a 30 percent plunge in the last three weeks, or if panicky investors who borrowed heavily to speculate on stocks will continue to sell.
In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China’s state-backed margin finance company which in turn would be aided by a direct line of liquidity from the central bank.
China has also orchestrated a halt to new share issues, with dozens of firms scrapping their IPO plans in separate but similarly worded statements over the weekend, in a tactic authorities have used before to support markets.
“After the 28 companies suspended their IPOs, there will be no new IPOs in the near term,” the China Securities Regulatory Commission said in a statement on Sunday night.
China stocks had more than doubled in just 12 months even as the economy cooled and company earnings weakened, resulting in a market that even China’s inherently bullish securities regulators eventually admitted had become too frothy.
But the slide that began in mid-June, which the CSRC initially tried to downplay as a “healthy” correction after the fast run-up, has quickly shown signs of getting out of hand.
A surprise interest-rate cut by the central bank last week, relaxations in margin trading and other “stability measures” did little to calm investors, who sent shares down another 12 percent in the last week alone.